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ECONOMIST Harvard-educated Tan Sri Dato’ Dr Lin See Yan talks about the paradox between the economy and real estate
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henever I read any business or economy news, I get the jitters. Europe is in turmoil now - economically, the US continues to operate below estimates of its potential while some parts of Asia are facing deflation and inflation. Malaysia is no better. Not that we are doing badly, but the signals that danger is nearing can already be seen. It brings this uneasy and queasy feeling like you’re about to fall sick. In Malay literature, there’s a saying “Sediakan Payung Sebelum Hujan” which implies; one has to be prepared to brace the challenging front. This saying is extremely relevant in the current property market. With Bank Negara’s Cooling Measures and the Government’s soonto-be-introduced Goods and Services Tax, those who are in tune with the country’s economy can’t help to wonder – what effect will it have on our economy? One thing is for sure; Malaysians have to be careful with their money. It is time to settle for less in effort to save more money. To give you an analogy, maybe it is time for us to enjoy the Cola from Tesco instead of the thirst quenching Coca Cola. The former is cheaper. The taste may differ a bit… but hey, it is still Cola. My point is, saving money has never been more important for us, especially now when home affordability is quite a huge concern. Malaysians’ wages are not increasing in tandem with productivity and this halts progress. And prices of property are not getting any cheaper, at least for now. So, to increase your home affordability, you have got to save up and reduce your household-debt. In order to save, we must understand the Economics of things. For the most part, Economics are common sense. But us, being human, we tend to disregard the simplest of thing in life and that includes common sense. Be open to have a lifestyle change if you are struggling to save anything and this goes out especially to the Gen-Ys out there. It is time for us to do what we can to improve our home affordability. And that starts from home. We may not be able to control the external factors ie : Government rulings but we can definitely control our own lives and expenses.
*Property Insight Malaysia will be organising its second PRISM Property Investment Summit & Expo 2014 this November 1 to 2. Poised to be the biggest property summit in the country, participants are in for a treat. Find out more about the event via www. propertyinsight.com.my or from our Facebook page ‘Property Insight Malaysia.
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Although every reasonable care has been taken to ensure the accuracy of the information contained in this publication, neither the publisher, editors, writers nor employees and agents can be held liable for any errors, inaccuracies and/or omissions. The contents of this publication do not constitute investment advice. It is intended only to inform and illustrate. No reader should act on any information contained in this publication without first seeking appropriate professional advice that takes into account their personal circumstances. We shall not be responsible for any loss or damage, whether directly or indirectly, incidentally or consequentially arising from or in connection with the contents of this publication and shall not accept any liability in relation thereto. The views by our contributors expressed here are their personal opinions and do not necessarily reflect Property Insight’s views. The publisher does not endorse any company, organisation, person, investment strategy or technique mentioned in this publication unless expressedly stated otherwise. The publisher does not endorse any advertisements or special advertising features in this publication, nor does the publisher endorse any advertiser(s) or their products/services unless expressedly stated to the contrary. All rights reserved. No part of this publication may be reproduced in any form or by any means, including photocopying and imaging without the prior written permission of the publisher.
2 OCTOBER 2014
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GAINING THE HIGH GROUND WITH FENG SHUI – PG 14 Dato’ Joey Yap tells Property Insight how Feng Shui helps with your property investment.
BUKIT JELUTONG : THE HIGH-END SUBURB – PG 42 What used to be an oil palm plantation is now a highend suburb, rich with investment potential.
ISKANDAR, FROM THE SINGAPOREAN PERSPECTIVE – PG 16 Know the advantages and drawbacks of investing in Iskandar region from the Singaporean point of view.
OF PASSION AND INVESTMENT – PG 54 World-renowned Dr Dolf de Roos shares exclusively with Property Insight his story as an investment Guru.
DEMOGRAPHIC TRENDS AND THE FUTURE PROPERTY MARKET – PG 32 With an increasing population, Malaysian property market has to adjust to the needs and wants of the demographic.
UNDERSTAND YOUR PROTECTION – PG 68 Ever wondered how your Defect Liability Period works? Finds out more.
www.propertyinsight.com.my OCTOBER 2014
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NEWS & EVENT Hollywood home sold at a steal
Dallas Cowboys cornerback, Orlando Scandrick took a big hit on his Hollywood Hills mansion selling it at $700,000 (RM 2,209,445) less than he originally intended. Scandrick initially listed the 3,300sq ft home last year at $2.85mil (RM 8,837,780) but when no one seemed to bite at this price tag, Scandrick significantly lowered the price of the mansion letting it go for merely $2.1mil (RM 6,628,335). Scandrick bought the place back in 2011 right after signing a huge $27million (RM 85,221,450) contract with Dallas and we can absolutely see why. The mansion offers the best views of Hollywood hills aside from featuring a sunken spa as well as retractable glass walls. Scandrick’s sudden move may be due to his recent break up with his reality star girlfriend Draya Michelle of Basketball Wives LA. Perhaps the basket baller was simply looking to move on fast.
ASLI holds 17th National Housing and Property Summit
Asian Strategy and Leadership Institute (ASLI) had just organized its annual 17th National Housing and Property Summit at Sunway Pyramid Convention Centre in Sunway, Petaling Jaya. The theme selected for this year’s summit was “Changing Landscape, Coping with a Challenging Year”. The event was attended by many industry experts and investors who took the opportunity to exchange views on many issues pertaining to real estate. Some of the key topics discussed in the summit include a debate entitled “Are cooling Measures Good for the Market and House Buyers?”, “Commercial and Industrial Property Outlook: Where is the Market Heading?”, “Residential and Condominium Segment: Is The Market Sustainable or Over-built?”, “Affordable Housing-Meeting a Growing Demand: New Thinking and New Strategies” and “Financing Housing and Property Development-Key Issues and Challenges”. The core purpose of the ASLI is to feel the pulse of the property market and assess the rhythm of development in the country. The yearly summit brings together leaders, government officials, and key industry players to discuss the key challenges faced by the industry as well as measures that need to be taken to strengthen the housing and property sector as the key push for economic growth.
IGB looks into Thailand to develop
IGB Corp Bhd (IGB) had arrived upon a joint venture (JV) to develop a maiden project in Thailand along several Thai partners. Majestic Path Sdn Bhd, a subsidiary of Pacific Land Sdn and a unit wholly owned by IGB had signed a share sale and purchase agreement with Immortal Group Co Ltd buying 49% of real estate firm Crystal Property Asia Company Ltd for an astounding RM65.6mil. Majestic Path also inked agreements with Immortal Group and Thai National Piamphongsarn to develop 19 plots of freehold land in a 49:51 JV between IGB and Thai landowners. IGB representatives revealed, “The land has potential for mixed development.” The developer plans to develop mixed use projects in the Bangsue district of Bangkok, Thailand while Cyrstal Property is the registered beneficial owner of 13 plots of land bought for RM78.01mil with a further acquisition of six plots of land for approximately RM18.38mil. IGB has posted an increase in 9.05% in net profits valued at RM66.56mil as its property development revenue has doubled for 2014. The group revenue has increased in 16.39% to RM293.05mil against RM251.79mil.
6 OCTOBER 2014
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NEWS & EVENT Mah Sing Group Marks 20th Anniversary Celebration
Mah Sing Group Bhd celebrates its 20th anniversary and to mark the occasion, the group introduced an ongoing two-month long campaign themed ’20 years of Building Memories’ as a form of appreciation for their loyal customers. The campaign will take place at selected Mah Sing sales galleries regionally. The campaign offers those who purchase Mah Sing products within this period some additional extras via their special Promotional packages. Mah Sing’s existing loyal buyers are also entitled to a special Buyers’ Appreciation package and Buyer-Get-Buyer reward package. Members of Mah Sing’s distinctive buyers loyalty programme called MClub will also enjoy an added incentive with every repeat purchase or introductory purchase. Mah Sing’s Chief Executive Officer Ng Chai Yong mentioned, “Now as Mah sing turns 20, we would like to invite you to celebrate with us during our nationwide tour, with selected project sales galleries kicking off our “20 years of Building Memories” campaign.”
Budget 2015 to paint a clearer picture of Malaysia’s economyGavin Tee
Andaman targets RM1bil in sales for 2015
Andaman Property Management Sdn Bhd is currently targeting property sales at a minimal of RM1bil for the year 2015 via the sales of its various launches lined up every quarterly Andaman’s managing director Datuk Seri Dr Vincent Tiew mentioned, “Our products are extremely important to ensure generated sales.” Q3 2014 saw Andaman launching Evo Soho Suites in Bandar Baru Bangi securing to date 90% in sales and 75% of those buyers securing loans while in Q4 of 2014, Andaman plans to launch Upper East that will stand proudly along Tiger Lane in Ipoh once complete. Evo Soho holds a Gross Development Value (GDV) of RM230mil while the Upper East development in Ipoh holds a GDV of RM330mil. Upper East will offer to buyers a total of 529 units. In Q1 2015 Andaman plans to launch more than 3,000 Soho units in Johor while Q2 will see the developer launching a total of RM600mil Soho units in Ampang, Selangor.
With Budget 2015 around the corner, many of the industry players are giving out their budget proposals to the government before the budget is being finalised. One of them is the founding president of Swhengtee International Investment Alliance Dato Sri Gavin Tee who had recently held a press conference to address the market issues. One of his concerns is; to improve the country’s image among the Chinese investors following MH370 incident. Some of Tee’s proposals for budget 2015 include – flexibility for foreigners in purchasing property, to stop foreign quota for MM2H participants, allowing bulk purchases on commercial properties, introduction of Guaranteed Rental Return (GRR) schemes and the adjustment of maintenance fee for properties. “Chinese in China are avoiding Malaysia due to their negative perception following the MAS incidents,” he said. Tee stressed that contrary to all the negative perceptions from both foreigners and locals, Malaysia in fact is still a very safe and peaceful country to live in. Gavin added that Malaysia is still a very good investment destination and Malaysians should not remain passive instead make an effort to aggressively promote Malaysia. He also said that his recent self-supported work in China was effective to a certain extent in debunking negative perceptions held by the Chinese.
OCTOBER 2014 7
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NEWS & EVENT
Another Showcase, Another Success
roperty Insight recently organised a five-day property showcase at the IPC Shopping centre, from Sept 3 to 7. The event received the participation of big property developers namely Tropicana Corporation Berhad, UEM Sunrise, Titijaya Land Berhad, Hatten Group, Sime Darby, IJM Land and MK Land. Apart from generating an approximate RM40mil worth of sales, the event attracted about 5,000 visitors who were exposed to the latest developments and best deals in town. Hatten properties senior property investment advisor, Ben Ho Seng Hsien said the event was well organised and went smoothly.”We introduced both our new and older projects. The crowd was quite responsive to us, especially at night. Since it was an open event, it gave us the necessary exposure. We will definitely join the next Property Insight’s property showcase,” he said. UEM Sunrise Group sales executive, Loke Jian Cheng said he can’t thank Property Insight enough for the opportunity given. “In our first two days we already got a few sales and I believe many more are waiting for us. Since the event took place at a mall,
8 OCTOBER 2014
we received good exposures for our projects,” he commented. Sharing the sentiment is sales consultant for Titijaya Land Berhad, Wai Jack Ho who felt it was great to participate in this exhibition as it attracted the traffic coming from IKEA. “Through this showcase, we are more exposed and we got the opportunity to see other developers’ projects too. But above all, we made our sales and I’m pretty sure we will be joining Property Insight’s next property showcase,” he said. Similarly, Tropicana Corporation Berhad sales executive, Steve Lim thought that the event was a success and a big crowd came to see their projects. Lastly, Sime Darby Property sales apprentice, marketing & sales, Nurul Aini Adila Abdul Hadi shared that they received a good exposure - thanks to Property Insight. “This showcase is a good event for us and it helps creates brand awareness for Sime Darby Property. People got to know about our new projects and township projects too, which they might not know before this,” she uttered.
9/12/14 7:26 PM
9/11/14 5:31 PM
THE ATOM OF DIVINE GEOMANCY
The art of Vasthu Sastra is gaining huge popularity among Malaysian investors today. Rachel Joseph finds out why. any of us may be well-aware of the art of Chinese Feng Shui, but how many are well versed in Vasthu Sastra — a 5,000 year-old science of architecture and construction found in the ancient Indian scriptures of Vedas? Vasthu Sastra focuses on the flow of subtle energies. According to Vasthu Sastra’s expert, Dr T.Selva who is also the author of a best-selling book titled Vasthu Sastra Guide, the Indian geomancy emphasises the law of nature and flow of energy, tuned with the cosmic forces in the aim to create bliss, joy, good health and prosperity. For centuries, Vasthu Sastra has been widely used in India for people to purchase properties. It has the same underlying principle as Feng Shui; to live in harmony and to live according to the energy surrounding us, rather than living against the energy without realising it. “The Science of town planning during the Vedic period (2500BC-200AD) was given paramount importance to the extent that Indo-Aryans perfectly
10 OCTOBER 2014
shaped human settlements into various categories depending upon the characteristics of the population,” says Selva who is also a columnist and radio and television personality. He continues, “The application of Vasthu Sastra extended not only to residences and temples but also to military barracks, marketplaces, ports, administration buildings and, of course palaces, of which many have withstood the test of time.” Vasthu Sastra is based on the arrangements and balancing of the five elements - ether, air, fire, water and earth - in their proper order and proportions. According to the theory of the five elements, they are present in every atom of the universe and they need to be present in abundance within the home to make it vibrant and filled with positive energy.
Vasthu Sastra in Malaysia
When asked on the awareness level of Malaysians towards Vasthu Sastra, Selva replies, “Although the origin of Vasthu Sastra is from India, it is now widely known outside of India too. In Malaysia,
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awareness of the art of Vasthu Sastra is spreading and this is catalyzed by the 370 talks I have presented at property fairs and events in the country as well as the radio and television shows I have hosted. More and more people are seeking Vasthu Sastra knowledge when purchasing, designing or renovating their homes because it gives people the confidence of peaceful living.” This science of construction, Vasthu Sastra, offers property investors the chance to enjoy a trouble-free investment. Ideally, before investing, every potential buyer is urged to know their zodiac symbols that are determined under the moon sign (raasi) before purchasing a property. This allows the option for investors to choose a property which direction is in accordance to their zodiac symbol. Selva says, “In Vasthu Sastra all numbers are fine. What is more important is in which direction is the main door of the house located. Every property buyer should incorporate Vasthu Sastra knowledge in order to give them additional strength, hope and confidence in choosing the most favourable property for each individual.”
Vasthu Sastra’s teachings recommend investors to check certain things before buying a new or secondhand house. One of the techniques includes using a magnetic compass to check the poles direction in various places of a house. Selva explains, “Identify in which direction the main door is facing and in which quadrants are the kitchen, master bedroom, children’s bedroom, guest room, staircase, and toilet Dr. T.Selva
and bathroom respectively is very important.” Following this exercise, one needs to find out which side the plot of ‘’spearing’’ roads are, whether the plot slopes towards or in which direction the plot is raised, the shape of the plot, the quality of the soil, the existence of plot extensions and what the surroundings are like. “A house facing north is favourable because it is on the magnetic axis and welcomes positive energy, and land sloping towards the north is also considered auspicious. A house facing south is average for residential purposes but auspicious for people in the food and beverage business. Land sloping towards the south is considered inauspicious,” Selva tells. He adds that a house which faces the east is auspicious because it receives solar energy. If the land is sloping towards the east, it is considered propitious. A house facing west is average for residential purposes and, it is more favourable for businessmen in the entertainment business. If the land is sloping towards the west, it is inauspicious. Vasthu Sastra is being practised to bring harmony, prosperity and peace to homes and businesses. “The science is accurate and there are no flaws. However mistakes do surface from time to time when people practise it incorrectly, due to the lack of understanding on the knowledge. There are people who want science to follow their likes and dislikes instead of them following the Vasthu Sastra rules with faith and respect,” says Selva.
Vasthu Sastra for Investors
Property Insight catches up with QUEBY Property Development director cum investor Dato Dr LS Kalaiselvam who has, for many years, renovated and built his office and houses according to Vasthu Sastra scheme. In his opinion, Vasthu Sastra brings goodness in one’s life regardless of one’s character, relationship, wealth or other factors. “Vasthu Sastra is one of the biggest elements and tools for every human being and we should believe and understand it as we are living in a home. A home can be our world and we should know in which direction and where our rooms, halls and dining area must be. Through my experiences, I encourage all to believe it,” highlights Kalaiselvam. He shares that Vasthu Sastra has brought wealth, peace and prosperity in his investment and career. It has benefited his family life too. Currently, Kalaiselvam owns six residential properties that comprise of condominiums, landed properties and five commercials properties. As of now, he prefers to hold all these properties and rent them out. “Thanks
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FEATURE Dato Dr LS Kalaiselvam’s home
to Vasthu Sastra I get to enjoy good rental yields from all my properties,” he tells. “My first property was not bought according to Vasthu Sastra but coincidently, the property was directed to the South which co-relates with my star (raasi). Prior to understanding Vasthu Sastra, I was just an ordinary investor, until I read Master T Selva’s book which I had found by accident in a book store. After reading it, I started to apply the principles of Vasthu Sastra in my life. Immediately, I saw the changes especially in facing every obstacles and I feel very blessed for who I am now,” shares Kalaiselvam. Kalaiselvam believes that Vasthu Satra helps him greatly in his investment decisions. “Vasthu Sastra helps ‘clear’ my path in everything I do and this comes in handy when I want to renovate my office, evaluate the contracts I have, judge people’s honesty and confidence as well as teaching me self-discipline. All of this is just so beautiful,” says Kalaiselvam. He recalls a purchase of a semi-D house he made in Taman Maluri, Cheras which cost him RM1.2million. “When I renovated the house, I demolished the whole structure and gave birth to a brand new home using the teachings of Vasthu Sastra, all in the effort to achieve the right energy and direction. I spent around RM1.5million for the
renovation but the result is very satisfying. Aside from being the biggest house in Taman Maluri, the house is now worth RM4million,” he shares. Following his successes in property investment, Kalaiselvam is currently in the process of ‘upgrading’ himself as a developer next year. He credits the use of Vasthu Sastra as one of his success secrets as an investor which has indirectly brought him to his soon-to-be-achieved status as a developer. “I’m in the midst of finding a plot of land in Klang Valley to build a condominium that will be designed according to Vasthu Sastra, so people get to enjoy the experience of having a peaceful home. The plan for each unit will be around 1,500sq ft,” he tells without revealing more. Vasthu Sastra is truly an art to be reckoned with, and just like Feng Shui, it works based on the energy surrounding us. As an investor, it sure doesn’t hurt to give it a try. If you’ve tried the method of Vasthu Sastra and have been enjoying its benefits or vice versa, write to us at readers@propertyinsight. com.my QUEBY Property Development director cum investor Dato Dr LS Kalaiselvam
T.Selva’s tips on buying a plot of land using Vasthu Sastra • • • • •
Do not buy a plot of land that has a graveyard either in front or at the back of it. Such surroundings will only bring fear and give no peace of mind to the owner. Buying land near a place of worship should also be avoided, especially if the shadow of a temple structure falls on the property. Land that slopes towards the west and south will be a source of financial trouble and destruction; it would be advisable to fill such a slope with earth to make the portion slightly higher or on the same level with the rest of the plot. What would be good is a body of water like a lake or a river in the north-east of the plot; this is highly recommended. Land that slopes towards the east and north will bring fortune and luck. Hills and boulders in the south and south-west of the plot are also good.
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Gaining the High Ground with Feng Shui
espite the inflating property prices in the local and global property market, property investing continues to be an incentive in our country’s target in becoming a high-income nation. Investing in property nowadays is not just about signing documents anymore. Instead of merely looking at the conventional world where ratios, gearing, returns, profits or countless other indicators are the determining factors for investment, we now look to an unconventional method – namely, the Feng Shui perspective. But how does Feng Shui factor in before you purchase a property? First and foremost, Feng Shui is a study of landforms that allows you to tap into the positive energy around you to help improve your life. By understanding and studying these landforms present, only then can you match your property with positive landforms to have good Feng Shui. You can start by looking at the master plan of the property development that you are interested in. If
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you are sharp enough, you will notice that there are some areas where certain houses will enjoy better Feng Shui compared to others within the same development. This is due to the effects from the landforms. But how do we know which will be better at receiving positive Qi? To properly understand how Feng Shui works in relation to property investment, consider the geographical location of Malaysia and how we can derive power from the mountains, rivers and lakes. We can deduce whichever is more present in the region as the country draws its Feng Shui from the dominant mountains from the North and all the way to the South. Since mountains govern the overall Qi in the environment, they are also responsible for producing Wealth Qi, something that everyone who wants to enjoy prosperity in their life would want to seize upon. Mountains are regarded as Yin because they are stationery and immovable and are often referred to in classical Feng Shui as ‘Dragons’. It is the natural
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FEATURE Determining the position of a mountain
appearance of these mountains that connotes the type of Qi released into the immediate proximity and environment around them. As Malaysia is fortunate to have many types of mountains and hills throughout the country, the two most common types that you should look out for are:
The Good Mountain
A prosperous or good mountain is green, lush and gentle in appearance with rounded tops. Such mountains are healthy and growing Dragons (Sheng Long) and emit benevolent Qi.
Once you know how to spot the different types of beneficial or unfavourable types of mountains, determine the proper position of the mountain in relation to your property. For instance, if the mountain is at the back of a house, it is said to be supportive as it heralds security and stability in the home as well as family harmony. Any mountain on the left of a property is known as the Green Door Embrace (Qing Long Sha) - not to be confused with Sha Qi. The former protects the property from violent Qi and benefits the male individuals living in the house. If the mountain is on the right of the property, it is known as the White Tiger Embrace and it also protects the property from any violent Qi. Similarly, they should be of a moderate distance, and not any higher than the Green Dragon. Should you wish to increase the value of your property over time, you should look for hills or mountains in the Northeast and Southeast side of the property to make this happen. Though, it is better to have the mountain coming in from the Northeast side as this will yield faster and better results. Despite the types and locations of these mountains in relation to your property, ultimately, the end decision is yours to make alone. Follow your gut instinct as well as the general knowledge of how Feng Shui can help you make the right decision. When you are able to do so, it will become second nature to you, making it easier for you to fully utilize its benevolent impact on your life and investing in a property as well.
The Bad Mountain
Bad mountains are steep, sharp and have pointy tops, like that of a witch’s hat. Other bad mountains are those that have naturally collapsed and these are known as broken mountains as they have a rocky appearance from being blasted with explosives, mined or quarried. Even mountains that have a mix of greenery and rocky appearance are considered detrimental as well. These are identified as Sick Dragon (Bing Long), as the peak of their Qi does not flow well. About the Contributor Dato’ Joey Yap is Asia’s Leading Feng Shui and Chinese Astrology Consultant and the founder of the Mastery Academy of Chinese Metaphysics, a global organisation devoted to the teaching of Feng Shui, BaZi, Qi Men Dun Jia, Mian Xiang and other Chinese Metaphysics subjects. He is also the Chief Consultant of Joey Yap Consulting Group, an international consulting firm specialising in Feng Shui and Chinese Astrology services.
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ISKANDAR, FROM THE SINGAPOREAN PERSPECTIVE
he Iskandar region in Malaysia, officially launched in 2006 encompasses an area of 2,217 square km. The whole of Iskandar is roughly three times the size of Singapore and it covers the city of Johor Bahru as well as the adjoining towns of Pontian, Senai, and Pasir Gudang. As of December 2013, Iskandar Malaysia has a population of about 1.9million of which the total workforce is about 750,000. With strong support and marketing efforts by the Malaysian government, many investors and developers, especially those from Singapore, have swarmed into Iskandar Malaysia as they saw it as the next big thing. In this article, we will take a look at some of the merits as well as the drawbacks, from the Singaporean perspective, of investing in Iskandar
Advantage 1: Affordable properties in Iskandar Malaysia Even though property prices in Singapore have started to come down, price level is generally still quite high. This can be seen from the private
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property price index compiled by Singapore’s Urban Redevelopment Authority (URA) in Figure 1. Even though Singapore private property prices have started to come down, they are still higher than the property boom of the late 1990s as well as the 2008 property boom (just before the Global Financial Crisis). Just looking at the private property sector alone does not give us a complete picture of Singapore’s property market. This is because most Singaporeans stay in public flats from the Housing and Development Board (HDB) making up more than 80% of Singapore’s residential property supply. Hence, to get a better idea of how property in Singapore is doing, we should also look at the HDB resale flats price index. Based on Figure 2, it tells us that prices of HDB flats have been on a steady rise since 2007. Akin to the private property market, resale flat prices have only just started to come down which means that at this point, it is still quite expensive to buy a public flat. To give some perspective, the median price of a 5-room public flat in Ang Mo Kio, one of
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FEATURE Figure 1: URA Private Property Price Index (PPPI) from 1975 to 2014 Q2
Source: Urban Redevelopment Authorities, Singapore
Figure 2: HDB Resale Price Index from 1990 to 2014 Q2
Source: Housing Development Board, Singapore
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FEATURE Figure 3: Transaction figures for Johor State
Source: National Property Information Centre, Malaysia (NAPIC) the more popular residential towns, is S$635,000 or about RM$1.59million (based on an exchange rate of S$1: RM$2.50). Hence, at such price level, some Singaporeans will find properties in Iskandar Malaysia attractively priced.
Advantage 2: Affordable lifestyle
Apart from affordable properties, another draw that Iskandar Malaysia offers is the affordable lifestyle. In the past few years, the Malaysian currency has weakened considerably against the Singapore dollar. This means that Singaporeans, especially those who are thinking of retiring there, will be able to stretch their funds and lead a more comfortable lifestyle by living in Iskandar Malaysia. Moreover, with schemes like Malaysia My Second Home program (MM2H), that makes it easier for foreigners to live in Malaysia on long-stay visas of up to 10 years, some Singaporeans could be attracted to living in Iskandar and commuting to Singapore for work.
Advantage 3: Track record of capital appreciation
When it comes to properties, one key consideration that many (if not all) property owners look at is the potential for capital appreciation. Hence, another draw of Iskandar Malaysia is that properties there have a track record of appreciating in value. According to data from Malaysia’s National Property Information Centre (NAPIC), the average residential value of Johor property has risen by about 45% from RM136,034 in 2009 to RM197,147 in 2012. In comparison, the average residential value for the whole of Malaysia only increased by 30% during the same period.
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A case in point for the price appreciation could be seen from the increase in million-dollar transaction in the state of Johor. From Figure 3, it can be seen that residential, commercial and development land transactions that exceeded RM1million double in 2014Q1 as compared to a year ago. With the increase of million-dollar transactions, this means that more buyers/investors are receptive to paying more for units in Iskandar Malaysia, which also means that the potential of capital appreciation for existing owners is also higher. With these advantages, some Singaporean investors may think that owning a unit in Iskandar Malaysia is a “sure win” proposition. But before you rush out to buy something in Iskandar Malaysia, readers should note that there is no such thing as a risk-free investment and some of the potential drawbacks are as follows…
Drawback 1: More cash outlay due to minimum sum of RM1million for foreign property buyers
In end of 2013, the Malaysian Federal government introduced sweeping measures to cool the property market. Among them are increased Real Property Gains Tax (RPGT) rates as well as a minimum price ceiling of RM1million for foreign property buyers. Prior to the latest changes, the minimum sum for foreign buyers was only RM500,000. By doubling the minimum sum of RM1million (or about S$400,000), this means that Singaporeans who wish to buy a unit in Iskandar Malaysia will have to come up with more cash for their purchase. This would in turn push some of the Singaporean buyers to look for properties in places like Thailand and the Philippines. The high minimum sum also means that it could be
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FEATURE harder for these Singaporean owners to resell their units for profits. At present, the Iskandar Malaysia’s resale market is still untested. Unlike places like Kuala Lumpur, Iskandar Malaysia’s secondary market has yet to be established. From anecdotal examples, prior to the RM1million minimum sum, many of the resale buyers were non-locals. Therefore, by increasing the minimum to RM1million, more foreign buyers are keeping away and it could impact the sentiments for some of these existing Singaporean owners.
Drawback 2: Potential oversupply in the near term
Based on Iskandar Region Development Authority (IRDA), they envisage that Iskandar Malaysia will have a population of 3million by 2025. While there could be demand for properties in the long run, there could be a potential oversupply in the near term. According to data from NAPIC, the existing residential units for the state of Johor are 705,929. The incoming and planned supply is 118,191 and 168,371 respectively. This works out to be an increase of slightly more than 40%. In terms of absolute number, the upcoming supply for residential properties in the state of Johor is the most at 286,562. This figure is more than Selangor, which has a projection of 266,525 upcoming residential units. It may be worth noting that the state level figure is used as a proxy as there is currently no detailed breakdown of property supply figure for Iskandar Malaysia. Nonetheless, with the Johor state focusing on growing Iskandar Malaysia, it would not be too unreasonable to conclude that most of the supply increase would be from that location, not other parts of Johor. These figures suggest that there could be an excessive property supply in the future. The over supply could keep property prices, especially in the non-prime areas, low and Singaporean investors would have to wait for some time before they can actualise any returns from their Iskandar Malaysia investments.
Drawback 3: Increased causeway toll charges from 1 Aug 2014
With effect from 1 Aug 2014, both Singapore and Malaysia raised their toll charges for vehicles using the causeway. The net effect is that it will cost about five times more to commute between Singapore and Iskandar Malaysia. As highlighted earlier, one of the attractions that Singaporeans see in Iskandar Malaysia is the opportunity for an affordable lifestyle. With the recent increase in toll, some investors could see Iskandar Malaysia as a less value-for-money alternative to Singapore. That could be seen as a drawback by some Singaporean investors and prevent them from taking a plunge into Iskandar Malaysia.
In conclusion, Iskandar Malaysia continues to present opportunities and risks for the Singaporean investors. Putting things into perspective, some Singaporeans will be drawn to invest in Malaysia, especially in Johor. Apart from the close proximity, the culture, language and even family ties lowers the Singaporeans’ reservations to own properties in Iskandar Malaysia. Looking at how vibrant Iskandar Malaysia’s property market was in 2012 and 2013, it seems that many Singaporeans do recognize the opportunity there. However, due to various cooling measures and policy changes, investment sentiments have turned cautious. That said, if some of the measures were removed, demand for Iskandar Malaysia properties would almost certainly return – and that is something that many market stakeholders are currently waiting with much anticipation.
About the Contributor
Mr Getty Goh has a Masters in Real Estate from the National University of Singapore (NUS) and he is the CEO of CoAssets.com, South East Asia’s first crowdfunding website. Mr Goh is also a director with Ascendant Assets Pte Ltd, a real estate research consultancy and think tank. Ms Joanna Chia has a Degree in Business from Royal Melbourne Institute of Technology (RMIT) and she is an Assistant Business Development and Research Manager with CoAssets.com. The views expressed are their own.
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CONNECTED, but Not Quite
Harvard-educated economist and Britishchartered Scientist Tan Sri Datoâ€™ Dr Lin See Yan shares with Zuhaila Sedek-De Booij the irony of the relationship between economy and real estate.
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eritas. That’s the name of Tan Sri Dato’ Dr Lin See Yan’s office. In Latin, Veritas means ‘truth’ and it is also the motto for Harvard University students. Being a product of Harvard University, it makes sense for Lin to have his office named as such. As soon as the automated sliding door of Lin’s office opens, I am feasted with contemporary oriental décor. Wow! This is quite an office. I walk up the stairs and another glass door slides open right after I utter ‘Open Sesame’. “Oh hello! Come in, come in...,” says 74 yearold Lin flashing a wide smile. I take a quick 360 degree view. The room is surrounded by stacks of books and there’s a leather sofa and brown coloured chairs filling up a space in the room. “I prefer this chair,” says Lin pointing at one chair with a red cushion before sitting on it comfortably. “I always sit here,” he adds. I find Lin a fascinating figure to be interviewed. His calibre is undeniable and his contributions to the country’s economy are irrefutable. Plus, he is probably one of the very few who has had the opportunity to work closely with the government since independence. “I have worked with all our Prime Ministers and every finance minister in the country,” Lin tells. Lin was a significant figure at Bank Negara Malaysia for three decades. He served the institution for 34 years and a quarter of that period he spent as the deputy Governor. The current Governor of Bank Negara Tan Sri Dato’ Dr Zeti Akhtar was once his staff and her father, prominent economist, YM Prof Diraja Ungku Abdul Aziz Ungku Abdul Hamid was once Lin’s teacher. What a small world it is. Today, Lin holds many positions. He is the chairman
COVER STORY of IGB REIT Management Sdn Bhd which manages Mid Valley Megamall. He is also a board member of many corporations and a member of various trustee boards like the Tun Ismail Foundation, Jeffrey Cheah Foundation, Harvard Club Foundation, Prime Minister’s Exchange Fellowship and plenty others. The father of four was also a member of the Prime Minister’s Economic Council Working Group and the Ministry of Education Search Committee for Vice Chancellors. Being the first batch of University Malaya students and among the first Malaysians to study in the prestigious Harvard University. In this feature, Lin explains the ‘tricky’ connection between economics and real estate.
Linked at a Separation
For Lin, the property market has a low direct corelation with the economy. There is a ‘disconnect’ in the relationship between the country’s economic growth and what is happening in the market. This is partly due to urbanisation. “For example, Europe today is in such a mess (economically). Italy is back into its second recession and Belgium is a classic example. The United Kingdom is in the same boat too. But property prices at all these places are just plain crazy (high). That’s why I say there is a disconnect between property prices and the economy,” Lin says. “If the economy is doing well, it doesn’t mean the property market will too. Singapore’s economy for example is good but her property market is not. So, the relationship is not a strong direct one. It all boils down to how much wealth you have and your income stream. The way you should look at property is; whether you see a property as expensive or cheap is just a point of view,” he adds. To him, there are only two indicators to gauge if property makes sense to a person or not. These indicators are; 1) the ratio between the house value and after tax income, 2) the ratio between the house value and rental. “When I started working in Bank Negara in 1960, I got paid quite well. All in, I earned about RM1,000… higher than a civil servant. At that time, a car costs RM3,500 which is three and a half times my monthly salary. But I bought a Volvo for $6,000. That is six times my monthly salary. Today, you get the cheapest Proton for about RM42,000 and when a graduate earns around RM3,000 (and that’s high) it takes about 14 times his salary to buy the car! It is very important to understand the relationship between your income and what you can afford, “During my time, a 6,000sq ft bungalow in Petaling
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Jaya costs less than RM20,000. I earned about RM10,000 (after tax) annually so a bungalow like that costs only one and a half to two times my annual salary. Today, if a guy earns RM3,000 , a car is about 14 times his monthly salary and if he wants to buy a link house, it’ll probably cost him around RM750,000. So, you calculate how much salary he needs to own such a house. This shows that the relationship between your income and price of property has gone out of whack. To me houses have become very expensive - just out of proportion with what you earn,” Lin explains. The second indicator is the value of your house against your rental. “When you buy shares, one of the important benchmarks is your PE (price/earning ratio). The rule of thumb is; anything from 10-15 is on the high side, anything below 10 is reasonable and anything above 15 to 20 (except IT stocks) is out of line. My point is, if you buy a property for RM750,000 and you enjoy rental of anything between RM1,500 to RM3,000, your PE gets out of line,” he says. “I think residential property is oversold… the prices are out of whack. I’ve spoken to many developers and they said that their properties are all sold. That’s true
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because parents buy these homes for their children. But when I drive around at night I see a lot of these huge high rises - but there are no lights. Parents today bought these houses for children but the children can’t afford to stay there. They prefer to stay with parents where they get free laundry, food and free everything else because they don’t earn very much and they are quite homogeneous in the way they spend. Plus, most of these children have negative savings,” adds Lin. Because of these reasons, Lin thinks that the economy and real estate while linked are separated at the same time. To him, if the economy is well-run, everything that you buy can be a good investment, provided risks and return are well synchronised. With regards to property bubble, Lin says it is difficult to predict whether the bubble will burst or not. “Nobel Prize winner Daniel Kahneman who is a Behavioural Economist says there are many experts in the world, but many of them have no expertise in predictions. Most of the time, no better than a monkey throwing darts,” Lin says. Contrary to that, he says that the Goods and Services Tax (GST) is predictable. “GST is seldom neutral. Based on the experiences of the countries that have implemented GST, the first 18 months may seem alright. But it all depends on how you set what is zero-rated. Government tends to protect the poor, so for the poor, there won’t be much difference but the people who will be badly hit are those in the middle class, especially the upper middle class,” Lin warns.
In property, the 3H strategic principle is important. The 3H are; housing, highways and horses (cars for transportation). Lin points out the 3H recipe adopted
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COVER STORY by the United States which brought much economic success. “After the World War II ended in 1945, the Americans were worried because the US economy was mainly driven by war. Everybody was working, but they were building planes, trucks, guns, tanks and everything that is for the war. After the war, they wondered, ‘what do we do now?’. My professor at Harvard University, Wassily Leontif (Nobel Laureate in Economics 1973) who came from Russia, designed the input-output analysis. It is a spreadsheet of what comes in and what goes out. So, you can see in detail the interrelations among transactions in an economy. It is a fantastic invention and he told the American president that America won’t go into recession if he follows this advice and pursues 3H strategy,” he says adding that property boomed because of this. This 3H approach was employed by the Malaysian government too. “The Americans built their network of highways to open up new suburbs because they had all these soldiers who just came back from war and they needed a home. Then the country began churning out cars and trucks and that what was propelled the American economy for the next 25 years,” Lin says. The relationship between the economy and housing is part and parcel of this business model. “This is what I told Mahathir (former Prime Minister Tun Dr Mahathir Mohamad) many years ago. Everyone in the housing industry will benefit from the same idea coming from Professor Leontif and the 3H system can be very effective even for today,” Lin cites. He strongly urges the country to have a good highway network to ensure easy accessibility for the people. This network has to be designed well, so development doesn’t have to be concentrated in congested areas. Taking into consideration the importance of connectivity, Lin reckons the significance of Mass Rapid Transit (MRT) project. “The MRT opens up access to the more populated urban areas. Unfortunately, building the MRT can’t be hurried and it is expensive. “I think the mistake when the LRT was initially developed was that the private sector took up the project and they wanted to spend the very minimum. So what happened was the lines didn’t reach the crowded places in downtown where people wanted to be at, and there was no effective connectivity. If you go to other parts of the world like London, or even as close as Singapore, their train systems all have a circle line that connects everybody. When you have one line there’s little connectivity. So you have
to build a few more lines. That’s why it is going to take some time to see a proper connectivity to materialise here. But still, the MRT doesn’t solve another problem, which is affordability. This is because many parts of the economy are still in dire straits, mainly due to productivity that is still lagging behind wage increments,” the economist says.
Afford More by Increasing Productivity
Currently, housing affordability is a major issue. To Lin, the government needs to adjust its transformation program to reflect basic fundamentals. “When wages grow faster than productivity, it can be very dangerous. In fact, this issue (wage and productivity imbalance) has been widely reported. It is a huge danger because if I pay you more than what you are worth in terms of productivity, somebody has got to pay for the difference including by taxation. That means the underlying foundation of the economy is out of line. This is a strong indication that real transformation is needed,” Lin thinks. What does transformation mean? To Lin, transformation means increasing productivity. “In the old days, you could increase productivity by putting in more capital. You got a bang for your buck by getting higher productivity through injecting more and more capital. But there’s a limit on how much capital you can put in,” he says. He adds, “I’ve seen the economy grow since the 50’s. The economy has grown so fast that we are now on the down cycle. Everytime we put in more capital, the return on capital falls. That’s not the model for the future. So the Prime Minister is right about the need for the nation to transform. But how do you transform? … by increasing productivity, of course. And this
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COVER STORY is possible only through innovation. This is where creativity comes into the picture.” He iterates that innovation doesn’t merely mean inventing things. It is as simple as always doing things better. To encourage innovative thinking, education is pivotal. He blames the British for bringing in “socialism” which has affected our local education system. “There’s this strict streaming system that still exists till today and I think it is a big mistake. When I was in school, I wanted to study architecture but I couldn’t because I was streamed early into the “arts” that didn’t permit this. The UK’s education system is so rigid unlike the American’s liberal arts system. “Although I’m a big fan of a good American education, we can’t make students wise. It educates but does not impart wisdom. That’s why people like Bill Gates got bored and quit Harvard to make his own invention. Steve Jobs quit Standford and look at how successful his products are now. In that sense, there is a flaw in the American education system, but still, it gives people options. This allows them to open their minds and that’s what a good society does. Singapore tries to do this too but when you have a small population, there will be other problems. That’s why they steal our best people,” he shares adding that Malaysia is also facing a brain drain issue right now.
Central Bank and Its Effort
Asked on what he thinks of the Central Bank’s introduction of the cooling measures Lin feels that Bank Negara’s job is not to look at housing or to cool down the market. Its job is to make sure the economy is stable and that there’s no inflation. That is its core business. He reckons that the cooling measures are a signal from the Central Bank to alert industry players to be more careful about asset bubbles. “Inflation and asset inflation are different concepts but they are inter-related. So, that’s why there’s no particular monetary policy to handle house inflation or asset bubbles. But Bank Negara recognises that
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when this happens, it affects the efficiency and productivity of the economy. So, they introduced these macroprudential measures rather than a particular monetary policy measured, like raising interest rates to control mortgage – on how much and in what areas one can borrow. Most of the time, they act on the demand side… that is to lessen demand, hence cooling the market,” Lin explains and adds that Bank Negara finds it difficult to control the supply side but they can monitor credit flow. The economist reckons that there are ways to utilise monetary policy to control the supply side, but this has yet to be fully explored. “You want to increase the supply so that the prices won’t go bust. But that is not easy,” he shares. Lin explains that the UK tried a number of interesting methods to help boost housing supply. “There’s a policy called Right to Contest where the local councils open up opportunities for the public to take up any unused lands or houses in London to be developed. This is one of their efforts to increase property supply. The councils also lease out to the public any public buildings that are not effectively used for housing development. By doing this they try to get the public involved and maximise the use of public properties and lands. That’s an interesting way to do things,” Lin says. He gives another example – a system introduced in Scandinavia where the public who own a garden, with ample space, is allowed to freely build a small house, which must not exceed 3 meters in height and 300sq ft in size. It beats living with your parents. For Malaysia, it is important to promote effective housing supply that is often being deterred by the imperfection in the system. “The authorities are the worst people to decide the pricing of houses, whether they are too high or too low. They have no business to do so,” he says. In Europe, the European Central Bank has implemented a “European” version of Quantitative Easing strategy which have the same effect of flooding the market with liquidity for easy borrowing. But by doing so, it devalues the European currency (EURO), Lin explains. He adds that Europe is also facing a problem of deflation while Japan is still scrambling to manage its deflation. “In Japan, the aged community like deflation because they get to ‘stretch’ their Yen as they get to buy more at a cheaper price, but the Japanese government tries to avoid that by injecting inflation instead. This is too confusing for most Japanese. That’s why a lot of Japanese are moving to Malaysia because things are cheap and they get to ‘stretch’ the Yen,” Lin cites.
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COVER STORY “The world is in such a funny shape and most countries don’t know what to do. For us, the Ringgit is too high which means it is too weak. I think the Ringgit should be between RM2 to RM2.50 against the US Dollar. To realise this, the economy has to really transform and productivity has to increase,” he reckons.
His Personal Story
Lin got into Economics by accident. When he was in school he wanted to be an architect. “My father was a good painter but I’m a lousy painter. The only thing I inherited from him is a keen eye for beauty. I can spot beauty anywhere,” says Ipoh-born Lin. This explains his interest in art. No wonder his office is filled with various paintings and sculptures. When Lin was in school, Catholic school that is, he was streamed into the arts class and this disallowed him to study architecture and there wasn’t a class that will let him study the subjects that he wanted to like Mathematics and Literature. One fine day, Lin’s teacher who was a Christian Brother heard of his plight and asked him, “Have you heard of Economics?”. The Brother who came from the Cambridge University took a correspondence course in Economics. “He will teach me Economics every time he received his lessons. He was always one lesson ahead of me. If the lesson is delayed by post, then there’ll be no lesson. That was how I studied Economics,” Lin reminisces. Lin then went to University Malaya where he studied Mathematics, Philosophy and Economics. According to his mentors, the combination of Mathematics, Philosophy and Economics is the best one could ever
ask. Lin has 11 siblings ; seven are doctors. “My father who was a Chinese school teacher told me if I wanted to study Honours in Philosophy, I would be on my own. But then he changed his mind and was willing to finance my study after I told him that I’m going to study Economics,” tells Lin who then went on to Harvard University for his Masters in Business and PhD studies in Economics. When he was in the university, the former Bank Negara’s chief economist, the late Dato’ Siew Nim Chee spotted him and asked if he wanted to work for Bank Negara. Then at the age of just 21, Lin became an Assistant Economist at the Central Bank and over the years he rose to Economic Advisor before eventually being appointed the Deputy Governor at the age of 40. “There were not many Malaysians studying Honours in Economics at the University of Malaya in Singapore and after we graduated we had nothing but job offers. All the top posts at the government at that time were held by the English though,” he recalls. When he first joined the workforce, there was nothing in place. The economy was at a very challenging phase. He and his colleagues had to set up the necessary services and built the fiscal infrastructure. “Everything that you see in town today was started by us. I remember we started the stock exchange by putting a phone in our office in Bank Negara linking it to Singapore. Before that you can sit in the exchange and just arbitrage to make money. There was no risk. Then we put a telephone-link in the stock exchange and there was no more arbitrage. All was in one price. I had to use the chalk and write down the prices on the board everyday,” Lin whose mentors at Harvard include Nobel-prize winning economists Simon Kutnets, Wassily Leontief and Kenneth Arrow. He thinks that in order for Bank Negara to get monetary policy transmitted effectively into the economy, there must be relevant supporting institutions in town. “We are one of the very few institutions that gave up power. In those days, we built up expertise with the capital market but recommended to the government to set up Securities Commission (SC) to take care of the securities market. We then passed on our powers to the new SC,” Lin shares. After decades contributing to the economy and the nation’s growth, Lin is still very much passionate about his proffession as an economist. He has retired and travels constantly around the world. He now speaks, writes and consults on strategic economic and financial issues. He loves every minute of it and when asked whether he is going to slow down anytime soon, he replies, “What do you mean slow down?.”
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COVER STORY Mid Valley Megamall : Stronger Than Ever
Lin See Yan (left) and IGB REIT ’s chairman, Tan Sri Dato’ Dr ) IGB REIT ’s CEO Antony Barragry (right
n a recent online voting, Property Insight’s readers had voted Mid Valley Megamall as one of the Top 5 Malls in Malaysia in the magazine’s Reader’s Choice Award. Chief executive officer of IGB REIT Management Sdn Bhd Antony Barragry accepted the award along with IGB REIT’s chairman Tan Sri Dato’ Dr Lin See Yan. (IGB REIT Management Sdn Bhd manages Mid Valley Megamall). Barragry says, the growth of Mid Valley Megamall is in line with the changing standards of living and aspirations of Malaysians. “Shopping malls are actually an American concept and later it grew in Europe. The Europeans call it shopping centres. Over the years, developers began improving the design of shopping centres and realised the potential they have. Malaysia is the same,” he says. The progress of shopping malls in the country started since the 1960s and 70s. “In that period, you have Bukit Bintang and Sungei Wang became the first destination for people to go to. In the late 80s, a lot planning was done by the City Hall to improve Kuala Lumpur and KLCC eventually became the catalyst of the city’s growth. There was an emphasis on mixed developments and how you can bring retail, commercial and residential together. KLCC is probably iconic for Malaysia and at the back of that you have the high end Suria KLCC mall. Since then, more malls began to take shape. “When we opened Mid Valley in 1999, Sunway Pyramid, 1Utama and Starhill came up as well and people’s aspiration started to change. Mid Valley commenced its construction in 1996 and a year later the financial crisis came about. Nobody thought we would finish our construction then. I remember the banks used to come every month to see whether the project was moving or not. One guy even asked me, “Are the cranes moving everyday?”. We made it and
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managed to open the mall,” Barragry tells. Barragry believes that the life of a mall depends on the customers and Mid Valley Megamall has gone a long way. “In the first weekend of the mall’s opening, there were some people visiting the mall but more people came the next weekend. It was near Christmas day and we put up our first Christmas decoration and the whole place lit up. The crowd started pouring in and that’s when we learned what it means to run a mall. There are two things important to a mall – car parking and the toilets,” Barragry thinks. “But the real issue is getting customer’s loyalty. In the first few years, we looked carefully at our growth turnover and we realised that we are going to survive. We decided to run the mall ourselves so we set up our own operation systems – all of which you need to have to operate a mall. For the most of us who joined, we had no idea how to run a mall. But the best way to learn is to just do it,” he says about the beginning of Mid Valley Megamall. Ever since then, Mid Valley Megamall has been expanding and not only it offers a vibrant retail destination but it also allows the IGB Group (the mall’s developer) to move forward and build to rest of Mid Valley Megamall. Barragry reckons that to retain the mall’s success it has to have a good tenant-mix. “We’ve re-mixed, re-modelled and brought in new brands as well as entertainment to attract customers to create loyalty. There are many segments of customers in the market and we study each of them so we can deliver the right tenant mix,” he explains. Being a star attraction Barragry understands that the management has to be extra careful and pay attention to the details at the mall. With this in mind, the management team continues to add value to the mall. “We are now in our 15th year and we managed to do a lot of asset enhancements and keep the mall upgraded and contemporary. This contributes to the success of Mid Valley Megamall,” he says in the end.
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Mag ad (21cmx28.5)FA.pdf
Malaysia has been named countless times as one of the top places to retire in the world. But why is it retirement village has yet to take full shape in the country? Aidil Mohamad and Viknesh Ashley find out.
ow would you want to retire? If you have loads of money, you may want choose a private island to spend your days soaking up the sun. But if you don’t, you probably don’t mind a simple family setting with your children and grandchildren around. Whatever it is, the choice is there for you to pick. The same principle applies to a retirement village. It is a choice. However, a retirement village is not to be mistaken for the old folks home or nursing homes for the aged. In other parts of the world like Australia, retirement village has great investment prospect and its development is thriving. In the recent International Living’s 2014 Retirement Index, Malaysia stands at the third spot out of 10 best countries to retire in the world, after Panama and Ecuador. To top it off, Georgetown in Penang
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was recently crowned as one of top seven places to retire by Forbes Magazine. Based on these recognitions, one may ask, what’s stopping us from developing world-class retirement villages?
Director of Sri Seronok Retirement Village Datuk Dr Peter Mooney says, “Retirement village is for retired people who wish to live in a quiet environment, in self-contained units. Here, the residents can be alone or fraternise with other residents.” Unlike the old folks home, it consists of nursing and aged care living, in which professional medical care and assistance are provided according to the residents’ requirement. A management personnel from a local developer that develops a retirement village says, “The concept of retirement homes
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or old folks home is based on three elements; independent living, assisted living, and nursing care living. Retirement village has the first two elements - independent living and assisted living, while the old folks’ homes provide only assisted living and nursing care,” he tells. This source wishes to remain anonymous due to a legal requirement. One can choose living in a retirement village, unlike the old folks home. And this sets the two apart.
The concept of a retirement village is not foreign to local developers and there are a lot of vacant lands available. The real problem lies within the mind set of developers, the needs of the market and the management of the services and facilities provided,
our source explains. For developers, maximising their return is of utmost importance. There are two factors to consider to achieve this ; 1) independent living dictates that the buyer is living by themselves and doing everything by themselves, so developers don’t have to provide them with anything extra 2) Providing a proper assisted living that may cost developers more and their creative thinking to manage it. “Developers are perhaps more interested in developing high rise blocks of apartments or commercial property and sell them at a considerable profit,” says Peter. For the most part, building a house for the retiree is easy. The main hurdle is finding ways to bring together the property with the services that accommodate the assisted living aged community needs. These could vary from providing medical care to preparing daily meals, among many others. “The developers may have the perception that such investment may not give them much returns, especially if they need to manage the provided services. A resident also has the option to use or not to use the medical service the developers provide,” the source mentions. Another main challenge is the absent of legal infrastructure that supports retirement villages. Questions like, ‘What happens to the asset when an aging resident is incapacitated?’ may arise due to the vagueness of the law. According to our source, stigma in the culture is the least of the problem. “Whatever our race is, in Asia, the young is expected to take care of the elderly. This is a problem for developers since they cannot provide the market with the “need to buy” value. There are other options for retirees to choose from and they can live with their children if they want
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FEATURE Sri Seronok Retirement Village
to. But a full-fledge retirement village offers them something more - a specific lifestyle within an aged community that they will likely enjoy,” he explains. Financing too, is another problem. It may not be easy for the retirees to secure financing from the banks as they can’t be given long tenure to service their loan. “The instalment may be so high due to the high interest rate. So, ideally, the retirees may have to fork out a lot of money or pay in full,” the anonymous source tells.
Existing Retirement Homes and Future Projects
At present, there are not many retirement villages in Malaysia. One of the very few existing projects is Sri Seronok Retirement Homes which was established in 1988 and is located in Cheras. It was built on a two-acre land and is designed based on the resort concept. The residents rent the units there for RM800 monthly with a limitless tenancy period. It promotes independent living, and doesn’t provide nursing care. There are 36 partially-furnished units available in this gated development which offers a 24-hour security service too. Peter mentions that Sri Seronok is not a commercial project. It was introduced to feed the public’s social needs. The rental is set simply to cover the outgoings, and there is no concern for marketing, branding or other commercial considerations. There are a few developers currently developing retirement villages. One of them is the Malaysian Pacific Corporation Berhad (MPCB). Its project will take shape on the land of Lakehill Resort City in Iskandar Malaysia. Called Platinum Residence, it
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offers an exclusive living for the retirees. Platinum Residence is located just 65 minutes away from Changi Airport Singapore and 25 minutes away from Sultan Ismail International Airport in Johor. Platinum Residence encourages active lifestyle with close proximity to Octville Golf & Country Club and Tanjong Puteri Golf & Country Club. It will also house the largest spa and rejuvenation centre by the lake. Platinum Residence provides indoor swimming pool that is heated (lukewarm temperature) and it emphasises on safe design. All public areas and facilities around Lakehill Resort are specially designed and pay special attention to ramps and mobility aid for the aged. Special condos and clubhouse will be staffed by specialised medical care nurses and special arrangement is provided for daily healthcare and medical checkups. The condos available are sized from studio type to larger family type of 4-room suites. Another development is by a Singapore-based developer called Residential Villages Asia. To be developed in Iskandar Malaysia, they are developing two retirement villages, namely Fairway Golf Village and Hibiscus Village. Both offer similar apartments, garden apartments, cottage and pool villas. Fairway Golf Village sprawls over 780 acres of recreation space and boasts an all-around recreation program. It aims to offer unmatched luxury living and a full social program designed to entertain, stimulate and educate all residents. Fairway Golf Village offers apartments with a price ranging from RM1,481,047 to RM2,240,559 and pool villas starting from RM6,455,850 to RM7,848,288. Hibiscus Village on the other hand, is different.
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FEATURE Spread over 400 acres of land, it will host the first senior living community in South-East Asia that produces low carbon foot print. The project uses solar technology to power its water heaters, street and gardening lights, rainwater reclamation and the next generation green air-con It provides low power consumption appliances, intelligent power distribution systems, intelligent security systems and in room emergency systems. Only electrical cars are allowed and the units there are fully furnished. Hibiscus Village offers apartments from RM756,980 to RM1,136,735 and pool villas from RM5,567,221 to RM6,326,733.
There are some limitations to consider when investing a retirement village mainly due to the age restrictions and legality issues. But the prospect is undeniable. “The children can co-own a property at a retirement village for their parents so their parents could enjoy a lifestyle with a community in the same age range as them. They can also rent it out to another retiree for investment and in the future they could live in the property themselves,” says the source. The returns and rental yields depend on the services provided at the village, location as well as the current market performance. For Peter, he thinks the attractions of a retirement village are that they are safe and peaceful. He adds that Malaysia is an excellent place to retire and that is why the government introduced the Malaysia My Second Home program. Our unnamed source seconds the thought. “We have a great climate that foreigners loves. And prices here are relatively cheap too. Plus, Malaysia is one of the best countries that provide topnotch medical care and this further strengthens the position of the retirement villages. “The
Fairway Golf Village’s Pool Villa
infrastructure are all in place, but what’s lacking is the legal infrastructure and the need for developers to be more creative in finding solutions to provide a seamless service for assisted living. Once we sort these out, Malaysia can rival mature retirement villages in places like Australia,” he says confidently. The need for retirement villages in Malaysia can’t be denied. The Malaysian Department of Statistics has recently reported that by year 2030, the number of young population will drop and the older population will increase. This means the housing demand will depend more on the aged community. Hibiscus Village
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How Malaysia’s Demographic Trends will Shape the Future Property Market
t 30 million, Malaysia is the world’s 43rd most populous country. By 2030 it will be 36 million and an additional 1.5 million housing units will be needed. Today, the nation is relatively young, with a median age of just 27. However, this is expected to increase to 33 in the next 15 years. In the future, the workforce will also be increasingly service-based with growth in high tech and knowledge oriented jobs. How an additional 6 million Malaysian’s will be housed, the ageing population, migration within and between cities and economic restructuring will be major influences on the property market over the next two decades.
National Policy Setting
There are three interlinked national policies that will shape the future property market in Malaysia. The Tenth Malaysia Plan, New Economic Model and the National Physical Plan. All three recognise
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that the nation’s past economic success as a low cost manufacturing centre is no longer viable and that it needs to make the transition to a high value-adding innovator. The future economy will be about knowledge, skills and talent. To attract the investment and skills necessary to undertake this transition, national policies focus on creating more liveable, efficient and intelligent cities. Within this policy framework, there is a call for a shift away from corridor-like urban developments to concentrated development around existing and proposed activity/commercial centres. Future urban development should be compact, human scale and redevelop brownfield sites to use existing infrastructure more efficiently. There should also be significant investment in public transport, education and health facilities within these centres. Future property markets both within activity/ commercial centres and surrounding suburbs will be influenced by the extent to which these policies
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FEATURE Figure A: Comparative Demographic Age Profiles (2010)
(Data Source: MalaysiaN DEPARTMENT OF STATISTICS, Australian Bureau of Statistics, Singapore Department of Statistics) come to fruition. What cannot be avoided is the nation’s current and future demography.
Figure B: Malaysia’s Changing Demographic Profile (2010 - 2030)
Malaysia’s Existing and Future Demographic Profile
Figure A compares the age profile of Malaysia, Singapore and Australia. With a relatively high proportion of under 34 year olds, Malaysia has a distinct age profile. Since the 1980s, housing Malaysia’s younger generations (whether they are young dependents, young families or single workers) has been the driver of new demand in the property market. The future will be markedly different. A combination of declining household size and fertility rates and extended lifespans will see a dramatic shift in the nation’s demographic profile over the next two decades (Figure B). By 2030 the proportion of Malaysians aged 34 or less will drop from 65% to 53%. According to the Malaysian Department of Statistics between 2010 and 2030 the number of 15-24 years olds will actually decline by 200,000 and there will be an increase of nearly 2.5 million people aged 60 years and above. Growth in housing demand will shift from the young to the aged.
(Data Source: MalaysiaN DEPARTMENT OF STATISTICS)
Who Lives Where?
Understanding who lives where today and how these patterns are likely to change can provide some insight into what to look out for in future property markets. Within Malaysia there are marked differences in the age profiles of some states (Figure C) which can be broadly categorised as:
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FEATURE Figure C: Malaysia State Age Profile Typologies
(Data Source: MalaysiaN DEPARTMENT OF STATISTICS) • • •
Young Dependent States – Sabah, Kelantan, and Terengganu Early Career Working States – Kuala Lumpur, Labuan, Putra Jaya Late Career and Retiree States – Johor, Kedah, Selangor, Melaka, Negri Sembilan, Pahang, Perak, Pulau Pinang, Perlis, Sarawak
However, this is an oversimplification. There are distinct patterns within states and cities. In Penang for example, young families (with children 0-14 year olds) are more likely to reside in outer suburbs (Figure D). By contrast, 24-39 year olds are more likely to reside close to jobs (Figure E) and retirees close to public transport, high amenity locations and hospitals (Figure F). Similar patterns are evident in most Malaysian cities. (Note – darker red represents a higher proportion). If Malaysia follows demographic patterns evident elsewhere in the world it is likely the differences between states and within cities will become less
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obvious. In the future, the age profile of each state and many suburbs will look more like the national average. Communities will be more age diverse. This will translate to more housing demand in city centres and middle suburbs for retirees and young families. The housing market will likely respond by offering a greater diversity of price and housing configurations in these locations. Household lifecycles will also shape internal migration patterns. The current trend for older parents to move into their children’s homes to take care of grandchildren will likely continue and further diversify neighbourhoods. Given the forecast growth in retirees there will be a surge in demand for housing types (landed or apartments) that can accommodate several generations (intergenerational housing). While dedicated aged care facilities will most likely grow and become more sophisticated, it is likely that some will hire in-house carers who will also need to be accommodated. As cities become more service oriented new
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FEATURE Figure D: Proportion of Young Families (0-14 year olds) Penang (2010)
Figure F: Proportion of Retirees (60 years plus) Penang (2010)
(Data Source: MALAYSIAN DEPARTMENT OF STATISTICS)
(Data Source: MALAYSIAN DEPARTMENT OF STATISTICS)
Figure E: Proportion of Working Population (24-39 year olds) Penang (2010)
Where to Invest?
(Data Source: MALAYSIAN DEPARTMENT OF STATISTICS) workers will need to be housed – preferably close to their work place to reduce traffic congestion and create a stronger sense of community. Not all the jobs of the future will be high paid and high tech. Housing that can support lower paid workers and students will also be in demand around activity/commercial centres. In other words, as the population of cities and suburbs becomes more age diverse, so too will housing need.
To accommodate an additional 6 million residents and transition Malaysia’s economy, national policies advocate development around existing infrastructure, improved liveability and investment in public transport. This coupled with demand for housing to cater for retirees and the age diversification of urban centres and suburbs will be major influences on the property market over the next two decades. From an investment point of view look out for properties that are close to rail stations, health clusters, schools and universities, high quality parklands and recreation centres, aged care facilities and skilled/high tech employment hubs. Look for suburbs that have a diverse housing stock, are safe and have a strong sense of community. Look for intergenerational housing, studios and larger apartments around activity/commercial centres. Research what additional infrastructure is planned and think about how existing and future demographic trends will likely shape demand. Think about your own life cycle, imagine how the area might change, and consider whether this is where you would want to live in the future– whether you are planning to start a family, beginning your career, downsizing, retiring or investing.
About the Contributor
Dr Matt Benson is the co-founder of Geografia, an Australian based social and economic planning consultancy. He has a long association with Malaysia, having been an exchange student at the University Sains Malaysia in 1996. He established Geografia’s Malaysian office (trading as Perkhidmatan Perundingan Geografi Sdn Bhd) in 2013 and is currently based in Penang. Contact firstname.lastname@example.org
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DEVELOPER OF THE MONTH
Masters of Construction
Gabungan AQRS is set for big changes as well as substantial growth as more opportunities head toward their way. Viknesh Ashley writes. he roots of Gabungan AQRS Bhd (GAQRS) are planted deep within the building and civil engineering construction industry. The Group started off in 1999 when company Motibina Sdn Bhd was set up as a civil and building contractor. This move was followed by the establishment of Gabungan Strategik Sdn Bhd (GSSB) and Pembinaan Megah ikhlas Sdn Bhd in 1999.Both these companies alike Motibina were also involved in building as well as civil engineering construction. A couple of years down the road in 2003, AQRS the Building Company Sdn Bhd (AQRS) was established as a property development company. On Aug 20, 2010, all the companies as well as some additional companies within the Group officially fused under one corporate umbrella
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dubbed Gabungan AQRS Bhd. The Group had been listed on Bursa Malaysia as of the July 31, 2012 and is wholly purposed as a Construction and Engineering service provider as well as a niche lifestyle property developer. GAQRS holds a track record of excellence. Executive Director of Gabungan AQRS Bhd (GAQRS), Paul Ow Chee Cheoon mentions, “Our dedication to up company’s performance has reaped rewards, with key subsidiaries of our Group awarded the ISO 9001:2008 certification as well as receiving awards, letters of appreciation and other various recognition from our clients.” Paul Ow adds, “Our Group, now more than ever is committed to executing and delivering projects within a framework of quality, timely delivery of products as well as adherence to prescribed
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DEVELOPER OF THE MONTH Permas Centro Night Scene
Gabungan AQRS uses large windows in their development welcoming maximum sunlight into a spatially restricted room
budgets.” GAQRS is poised for growth in the sectors of construction as well as property development. Having recently achieved a listed status the company is now ready to undertake larger scaled projects with regards to contract size as well as complexity in both local and international markets. Paul Ow says, “Our Group will always focus on creating value for its customers while simultaneously providing our customers with innovative solutions.”
developments, we are a niche developer and this is where our Group has faced rapid growth with much growth potential expected for the future,” he says. GAQRS as mentioned by Paul Ow is indeed a niche lifestyle developer. It offers products that reflect GAQRS’s property buyers’ lifestyles while simultaneously providing the customers with products of added value through functionally and modern designed properties as well as properties featuring efficient use of space. When it comes to property pricing, GAQRS pitches themselves competitively as Paul Ow mentions, “We price our products in a competitive manner to create a potential upside for our buyers.” When asked about the Group’s strategy Paul Ow answers, “We have been dubbed as being a “picky” This room has been given the classy touch by niche property developer Gabungan AQRS
Upon being listed two years ago, Paul Ow reckons that they are much stronger with a better financial position and reputation. “We are a full-fledged construction company today and are able to take on various large scaled projects ranging from the construction of buildings all the way up to MRT development. With regards to our property
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DEVELOPER OF THE MONTH developer by the media. This is probably due to our construction division having their hands full with sufficient projects to last for another two years.” Adding to that Paul Ow thinks, “With sufficient jobs in hand, there is no necessity for GAQRS’s construction division to tender aggressively for additional projects. A better term that would reflect our style of choosing jobs for the group is “selective”.” Paul Ow states that it has not always been a bed of roses for the group as several challenges have been faced in the past. He explains, “The challenges facing the construction and property industry include cost, talent, labours, trends as well as finding suitable methods to manage these challenges.” He adds, “We have never taken these challenges as stumbling blocks that disrupted our businesses... definitely not. What we have done though, is to take these challenges as important lessons and grow The Peak
Permas Centro Day Scene
with them as there are always solutions for all these challenges.” A sure-fire method to face these challenges is to be focused and be highly creative and to promote innovations. “Instead of being a developer solely driven by market demand, we study the market trends and tailor our property products accordingly,” Paul Ow explains. GAQRS for example is responsible for the development of The Peak in Johor Bahru, a luxury lifestyle offering, that is reasonably priced and located in a prime area.
GAQRS has a total of 36 acres of land banks estimated at a Gross Development Value (GDV) of RM1.1 billion currently, with a majority of land parcels scattered across Johor Bahru as well as the Klang Valley. The Group always looks at the potential a chosen land bank has and its future prospect. Due to that, the company has decided to hold a few land parcels in some part of Malaysia’s Skygarden@The Peak
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DEVELOPER OF THE MONTH Executive Director of Gabungan AQRS Bhd (GAQRS), Paul Ow Chee Cheoon
most vibrant locales to leverage on its future return. Paul Ow says, “We always look at opportunities as well as the potential and value that can be generated for the land banks in our possession. We will evaluate these parcels of land with utmost care applying the strategies that we have acquired through the years before making crucial moves and by always keeping sustainability in mind.” GAQRS is currently focusing on a couple of projects which include The Peak, Contours located in Melawati Heights, Permas Centro located in Iskandar Malaysia as well as the construction of two blocks of 28-storey serviced apartments by Tropicana Metropark Sdn Bhd worth RM173million. When asked about future developments as well as land banks, Paul Ow replies, “We are currently looking for other places aside from Johor Bahru and
The Peak scale model
the Klang Valley to develop and the public will hear from us as soon as we have finalised our plans.”
GAQRS Property Outlook
With regards to the status of Malaysia’s property market, Goods and Services Tax (GST) implementation as well as Overnight Policy Rate (OPR), Paul Ow shares his insightful views stating, “The implementation of GST as well as the increase in OPR will most definitely affect all sectors of the economy.” “For residential property projects, since GST is not charged to the end buyer, many developers just like us are assessing the potential impact on their yearly statistics. When GST is implemented, it will replace the currently implemented Sales and Service Tax which may result in lower nett prices for certain materials, therefore it is a little too early to predict the final impact that GST and increments in OPR would have on developers,” states Paul Ow. “From a buyers perspective, it will take some time to digest these new concepts and to familiarise ourselves with it. As a developer, we must consider these factors when developing new properties as well as when deciding on the pricing of our future products,” Paul Ow elaborates. On property bubble, Paul Ow explains, “I doubt that Malaysia will soon face a property bubble, at least not within the next five to ten years.” Paul Ow’s reasoning is, when property prices in Malaysia are compared to those in Hong Kong, Singapore, Shanghai, Japan and Korea, we are incomparable. “The prices that we face here are far from being cheap however, that said we are
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DEVELOPER OF THE MONTH Clean lines are the theme that dresses this simplistic room
definitely not expensive.” Paul Ow adds, “Bank Negara’s stringent measures on the financial market as well as lending methods can be clearly seen as cooling measures to curb the speculations that the Malaysian market currently faces.” Keeping that in mind, Paul Ow cautioned that these cooling measures will not result in a sudden dip in property prices stating that, “These measures can reduce speculations to a certain extent however; prices of property may go up due to other factors such as rising material prices.” “Investors, looking at these measures will definitely take a more calculated decision with regards to their next decision in property investment. However, for
Gabungan AQRS chooses earthy tones that can match with almost every buyer’s taste
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those looking for a home will pose a ready demand not forgetting that we have a large number of young people that will soon look for homes of their own,” Paul Ow says. We may all wonder at some point that with rising property prices, GST implementation and banks being much stricter on giving out loans as to how a Gen-Y home buyer would afford his or her first property. To this Paul Ow states, “Yes, there is much concern in the market with regards to this issue however, it boils down to the affordability of this generation.” “There are several readily available products in the market and the government also puts alot of focus on assuring that the Gen-Y in Malaysia is able to secure a roof over their heads. One good example is the introduction of affordable housing. Young executives must sieve through the properties and prioritise on the ones that fit their affordability best.” “As a private developer we too are working towards providing homes that can create solutions for the Gen Y that is by introducing more affordable products,” Paul Ow concludes. GAQRS is also committed to delighting its customers by providing excellent and responsive customer service. The company hopes to be a premier leader of integrity, innovation and excellence in the construction and property development sector, both locally and abroad in the future.
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Bukit Suburban Living
Within the City
THE HIGH-END SUBURB
n Shah Alam, thereâ€™s a swanky and upscale suburb with a planned community called Bukit Jelutong. With an area of over 2,200 acres, Bukit Jelutong is the offspring of Guthrie Property Holding Berhad (GPHB), a subsidiary company of Sime Darby. Home to many landed properties - low-density bungalows and duplex houses as well as some terraced houses, Bukit Jelutong currently has very few stratified properties. Bringing all these together is a substantial amount of greenery that works as an enjoyment for its residents comprised of mostly families. The suburb was once an oil palm plantation called Bukit Jelutong Estate. It was re-developed in 1996 and the first construction in the locality was the Guthrie Pavilion building, which is the current headquarters of GPHB. Since then, Bukit Jelutong has slowly emerged as a popular address in Shah
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Alam that has consistent sales launches and prices that rival those in more established areas around Klang Valley such as Petaling Jaya and Subang Jaya. Bukit Jelutong is considered a serene locale, thanks to its lush greenery. Enjoying close proximity to Kuala Lumpur which is convenient for city dwellers, it also serves as a retreat from the hustle and bustle of Kuala Lumpur. Adjacent to Glenmarie, Bukit Jelutong is a fast-growing township with a strong base of service and manufacturing industries, along with a high ratio of professionals who provide natural and ready catchment for business. However with increased competition and scarcity of land, newer developments are designed around an integrated concept, incorporating the worklive-play model that is in line with current market demand.
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AREA FOCUS Skyz Residences
The Developments – Landed, Stratified and Commercial
Most developments within Bukit Jelutong incorporates green elements and are based on modern tropical or contemporary concepts, and the target markets is usually families. Sunsuria Berhad’s director of sales and marketing Simon Kwan explains that Bukit Jelutong has been
garnering a well-earned popularity over the past 10 years and can be considered a mature but still expanding township. “Bukit Jelutong has been intentionally masterplanned to be different from other areas which are slightly over populated such as Subang Jaya, Wangsa Maju, and Setapak,” says Simon. He also mentions that the location is surrounded by mature residential and commercial developments and still has strong potential for capital appreciation for residential market. In general, Bukit Jelutong has been accepted in the market and has already built a reputation for being a premium destination or an upscale suburbans. Bukit Jelutong has a number of notable developments going on. One of them is Suria Jelutong by Sunsuria Berhad. It is a mixed Shah Alam Stadium
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AREA FOCUS Sekolah Kebangsaan Bukit Jelutong
development project expected to be completed in 2015. Suria Jelutong covers a gross development value of RM250million and is constructed over 4.5 acres of land. The mixed development consists of shop lots, shop offices, boutique retail lots and serviced suites with a price range between RM235,000 and RM660,000. The project is also one of the last freehold commercial projects in Bukit Jelutong. Another development by the same developer is Suria Residence - a freehold serviced apartment project that spans over approximately 3.55 acres and is located in the matured neighbourhood of Bukit Jelutong that comes with full amenities. Suria Residence has a built-up of 1,235sq ft to 1,344sq ft. It is a gated area with smart access at the guard house and it comes with two residential towers, complete with elevated gardens, pool and floating gym, among others. WCT Holdings also plays their part in development in Bukit Jelutong. One of their projects is called Skyz
Jelutong Residence, a freehold serviced apartment project expected to be completed in April 2017. It offers two blocks with 15 floors each housing a total of 222 units that come with approximately 788sq ft to of 1,314sq ft. The project has a six-tier security system with a number of complete recreational facilities such as 40 metre vanishing edge pool, lounge pool, wading pool, Jacuzzi, cabana, children’s playground, reflexology path, gym, multipurpose hall, function room, sky garden, event deck and BBQ corner. The launch price starts from RM614,000 to RM1,106,000. “Bukit Jelutong already has a number of ongoing developments and the space is becoming limited. There will be more developments along the Guthrie Corridor, however, the overall evolution of the area will continue at a steady pace for the next five to 10 years,” Simon explains. For commercial, Sime Darby offers a commercial project called D’ Nine Junction that presents an exclusive nine units of 2-storey shop lots that have a modern and contemporary design. The lots available come in a size from 22ft x 65ft with high floor-to-ceiling height, wide verandah’s of 17ft, have unique column-less walkways and ample car park spaces. The units also promise wide open spaces with generous landscaping. The project gets high visibility and high traffic with its location being at the main junction of Jalan Tebar Layar and Persiaran Astaka, which are two high traffic roads. This equates for better business prospects for its future retail owners. Another development in Bukit Jelutong is a joint venture project by Sime Darby and UEM Sunrise called Radia. It is a freehold, mixed development
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AREA FOCUS comprises of retails, offices and residential spanning over 21 acres with a gross floor area of 2.7 million sq ft, comprising of 640 serviced apartments, 400,000sq ft of office space and 880,000sq ft retail space. In total, it is RM1.6billion worth of integrated property development! The project is expected to be completed in 2018 and upon its completion, Radia will provide shopping conveniences and easy access to services for more than 100,000 residents and working population in Bukit Jelutong. Radia is set to attract investors and businesses which are drawn to Bukit Jelutong’s close links to nature, heritage and recreational offerings with a slice of exclusivity.
Glenmarie Golf & Country Club
Amenities, Facilities & Others
“In terms of accessibility, Bukit Jelutong is flanked by a number of highways. It is well-served by an excellent road network,” says Simon. In July 2005, the Guthrie Corridor Expressway connecting Bukit Jelutong to Rawang was opened. The suburb is linked to KL, Petaling Jaya, Shah Alam, Klang and other population centers in Klang Valley by North Klang Valley Expressway (NKVE), Guthrie Corridor Expressway (GCE), Federal Highway and NorthSouth Expressway Central Link (ELITE). Simon also mentions that the expressways also link Bukit Jelutong to the Sultan Abdul Aziz Shah Airport, Kuala Lumpur International Airport (KLIA) and Port Klang. Bukit Jelutong also has a commercial centre. Guthrie Property had intentionally avoided developing large-scale commercial areas to avoid traffic congestion and noise to maintain the suburb’s atmosphere of serenity and exclusivity. Still, Bukit Jelutong has close proximity to the Tesco and Giant stores, which are located just 10 minutes from the suburb. Bukit Jelutong houses a few schools for its residence. For primary schools, there are Sekolah Kebangsaan Bukit Jelutong and also Greenview Islamic School – that caters to both primary and secondary school students. For secondary students there’s another school to attend which is Sekolah Menengah Kebangsaan Bukit Jelutong. There are a number of universities near Bukit Jelutong namely Universiti Teknologi Mara and Universiti of Selangor, among others. Soon, there will be a KDU College built in Glenmarie. In terms of recreation, Bukit Jelutong has quite a number of parks. Other than parks, Bukit Jelutong is also notable for its proximity to several golf and country clubs. These include Kelab Golf Sultan
Abdul Aziz Shah, Glenmarie Golf & Country Club, Monterez Golf & Country Club and Saujana Golf & Country Club. Shah Alam Stadium is just a 5 minutes’ drive from Bukit Jelutong. In future, Shah Alam and Bukit Jelutong will be linked by two new LRT stations (Kelana Jaya Centre Point and Subang Jaya LRT stations) and the Damansara-Shah Alam Elevated Expressway (DASH), which is an East-West radial line linking Damansara-Subang-Shah Alam, an alternative road to Subang Airport. Many other lifestyle and public amenities are situated nearby – such as hospitals, retails, mosques and civil services – for added convenience. Apart from all these features, Bukit Jelutong’s residents are active in community work. There is a resident’s association here called the Bukit Jelutong Residents Association (BJRA) that was registered in 2002. They are known for its close rapport with the local authorities and play a big role in keeping Bukit Jelutong’s residents’ safety.
Bukit Jelutong is definitely for those who yearn for a peaceful and safe locality paired with good accessibility to the city centre. It has a high potential for greater growth, especially for residential products. Surrounded by matured residential and commercial areas, Bukit Jelutong’s has yet to mature in its commercial properties but makes an excellent suburb for upper middle-class families to live in. It is strategically located and has good access to major highways. All these will boost its potential for growth.
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AREA FOCUS Price Analysis Property Types Commercial Apartments Semi-D Terrace Bungalow Plots
Land Area (sq ft) 1,300 – 9,000 4,144 – 10,516 1,647 – 5,091 6,600 – 9,740
Built Up Area (sq ft) 452 – 9203 840 – 915 2,908 – 3,765 1,448 – 2,813 -
Price Range (RM/sq ft) 218 – 1,283 190 – 339 558 – 1,100 199 – 706 119 – 194
Firdaus & Associates Property Professionals - Price Analysis
MARKET PRICE LANDED Period Jul 2014
Property Forte, Bukit Jelutong Jelutong Heights, Bukit Jelutong Mezzo, Bukit Jelutong
D’Puncak, Bukit Jelutong
Lagenda 1, Bukit Jelutong
Price (RM/sq ft) 400 400
Net Change 16.06 -NA-
% Change 4.18 -NA-
Price (RM/sq ft) 738
Net Change -NA-
% Change -NA-
Price (RM/sq ft) 580
Net Change 69.8
% Change 13.68
Propwall.my - Bukit Jelutong Market Trends
STRATIFIED Period Jul 2014 Jul 2014 May 2014 Jun 2014
Type Condominium Condominium Apartment Serviced Apartment
Property Elaeis 2, Bukit Jelutong Elaeis 1, Bukit Jelutong Seroja Apartment, Bukit Jelutong Suria Jelutong, Bukit Jelutong
Propwall.my - Bukit Jelutong Market Trends
COMMERCIAL Period Jun 2014 Jun 2014 Jul 2014
Type Shopping Mall Shop & Retail Corporate Factory
Property Space U8, Bukit Jelutong 1st Jelutong, Bukit Jelutong i-Parc1, Bukit Jelutong
Propwall.my - Bukit Jelutong Market Trends
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AREA FOCUS Bukit Jelutong Average House Price (RM/Sq Ft) 700
Q1 2011, 649
Q3 2013, 545 Q4 2013, 554
Q2 2012, 537
Price (RM/sq ft)
Q3 2012, 470
Q3 2011, 429 Q4 2011, 432
Q2 2014, 530 Q1 2014, 515
Q2 2013, 491
300 200 100
Propwall.my - Bukit Jelutong Market Trends
Bukit Jelutong Average Condominium Rentals (RM/sq ft) 1.5
1.45 Rental (RM/sq ft)
Q2 2013,1.4 1.4
1.2 1.15 2012
AGENT’S SAY Mohd Faizul Bin Osman Chester Properties Sdn Bhd Bukit Jelutong has become a high end suburb and has a good reputation. It can be considered a good place to settle down since it is covered with a lot of parks and most of the residential houses are landed, semi-Ds, low-density bungalows and terrace houses. Accessibility is also not a problem since there are various highways connecting Bukit Jelutong to Kuala Lumpur, Petaling Jaya, Shah Alam and Klang via the NKVE, GCE and ELITE.
A Halim Bin Ahmad IM Global Property Consultant Sdn Bhd Ever since Bukit Jelutong was launched, most of the developments at the suburb consist of landed residential. Some big names in the industries are starting to come in with new high rises and mixed developments. There’ll be more commercial centres to take shape there. Land is fast becoming scarce in Bukit Jelutong. In 3 to 5 years’ time, Bukit Jelutong will be bigger than ever.
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Are You Financially Overstretched?
ising property prices have become a hot topic and many investors have jumped into the property market lately amid the presence of many cooling measures introduced by the authorities. It is common for people to keep a large amount of their money in their savings accounts or fixed deposits and refuse to take any risks with it even for the low-risk fixed income type of investments. Yet, once the opportunity to buy a property turns up during a property boom, they quickly take out all that money and place it on the initial down payment for the property. Buying property as an investment involves risk just like every other investment. In fact, most people have to take up a mortgage loan to buy property. With the rise in property prices over the years, there are many investors who are committing well over 30% of their income towards property. People max out the loan amount, and saddle themselves with huge monthly housing loan installments in their desire to buy property. This is risky as a huge property loan is also a loan
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on all of our future income. Other than the upfront down payment, you will also be paying big sums to service the loan every month once you choose to buy as expensive a property as you can afford. It is very risky to make a bet on our future income, in a pursuit to own a big house. All it takes is just a change of job or a layoff, for our income to change accordingly as well. But banks will never care if your income happens to shrink, they will just repossess your house if you canâ€™t service the loan! Unless you are absolutely sure that your job and future income is very much secured, otherwise, it is not advisable to use most of your income towards paying off your housing loan. So how much should you commit when you want to buy a property?
Safe borrowing reduces risk (30-60 Rule)
Despite your desire to own property, it is important to do your sums first. As a rule of thumb, we always recommend home buyers pay no more than 30% of their current household income in mortgage
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repayments of their home. For example, if the total monthly income of a young couple is RM4000, they should only spend RM1200 or less on monthly installment for their new home. Assuming that effective interest rate of housing loan is 4.5% and they are entitled to loan up to 30 years, RM1200 should be enough for them to service a loan amount of RM238,500. If they use that loan amount for 90% of a new property, say an apartment, then they should be able to buy an apartment worth RM265,000. As for property investors who invest in their second property onwards, they should keep the monthly installment of each property below 60% of the monthly income that the property is generating, such as monthly rental income of the property. This is to provide some room to maintain a positive cash flow should banks revise interest rate to even double of the existing rate. For example, if the same young couple in the previous example, wants to invest in a rental apartment costs RM265,000 using the same loan package, they must be sure that the apartment is able to rent for at least RM2000 per month, so that 60% of the monthly rental income is enough to cover the RM1200 monthly installment. In the second example, if the interest rate doubled from 4.5% to an awesome 9%, then the monthly installment will increase from RM1200 to around RM1900. Here you can see that the increased monthly installment is still below the monthly rent of RM2000, although interest rate has doubled. This buffer is more than enough to serve as a safety net
against an interest hike. We ourselves call this the 30-60 Rule of Property Financing. • •
Pay no more than 30% of your current household income for mortgage of your home Installment for investment property should be less than 60% of the income generated by the property
What if you have done your sums, realise that you can’t quite start off with that dream home immediately, but you really want to invest your money in property? There are many other investment options which don’t quite require “all bets on the table”. You can buy property stocks, REITs, or property unit trusts, all of which can give you exposure to the property market without having to bet everything on just property alone and you can do it without having to take up a loan.
What to do if you are already stuck?
Many home buyers are feeling financially overstretched after under-estimating all the costs that being a homeowner brings. Most of the home buyers also found the additional expenses associated with buying a home on top of their mortgage payments had been more than they had expected. The huge expenses related to property ownership make these owners realise that they are already stuck in a financially overstretched situation. When you overstretched and put yourselves in an awkward situations like this, you may be reluctant
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to let anybody know, even your closest friends and family. So how can you improve your financial situation if you are already overstretched financially? 1) Shed those personal and outstanding debts. This is definitely the first thing you must do. Remember, those interest rates do nothing to help your situation. The last thing you want to happen is to see them climbing and making your situation much worse than it already is. The important thing to do here is to be proactive. Do not sit around hoping that your financial situation will improve on its own. Cancel subscriptions that you do not need, gym membership, premium TV channels orÂ magazinesÂ can wait till your situation improves. Use this money to lower your debts. 2) Downscale property. Yes, it is definitely time to take a step back and try to live on less. This means getting rid of everything that you do not need but only serves to complicate your life and your bills! This would be a good time to scout around your house and getting rid of anything that you have simply stopped using. Old gym equipment, old clothes or even your bike can be written off for sale. Imagine the amount of money you can make from stuff that you have absolutely no use for. Do a full sweep and be
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ruthless. Now is not the time to be sentimental. 3) Get a lodger or tenant for spare rooms. This is an excellent way to make money on the side while not actively doing anything. This will help you take care of your utility bills and other financial needs. Taking in a lodger can also mean added security for your home provided it is somebody you can trust, for all the time that you are away. There are no statutory rules involving lodgers as well so if your lodger proves to be unsuitable, you will have an easier time removing him from your premises. 4) Live with parents or friends. Before you balk at the idea, remember, this is just a temporary set-up only if you really have no choice but to sell the property that brings you into such situation. A few months is all you need to get back on your feet. Explain to your parents that this is only temporary and if they understand enough, they should not have any reason not to let you stay for awhile. Just remember to return the favour and not sit your butt all day. Do the dishes, wash the car, water the plants and be helpful. When the time comes that you are making enough money on your own again, graciously say thank you and start looking for your own place again. Do not overstay your welcome. 5) Speak with bankers.
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In many cases, a bank is the last one who wants to see your property go into foreclosure. Especially when the cost of foreclosing will be greater than what will be recovered, then it’s not worth the time, effort, and expense to foreclose a property. Of course, each individual bank has their standard procedures to follow, but you can always try to speak to them and see if there is any possible way to restructure your loan so that your monthly commitment can be lowered. Possible means are like refinancing for lower interest rates or longer tenures, or converting the existing loan to an interest only loan. For example, these days, some banks provide customers the flexibility to service interest payments only for the first few years. Ask around a few banks other than your existing lender to find out which one is able to help you.
Prevention is better than cure
There are many costs you don’t have as a renter which materialise when you buy a house. These include insurance, loan repayment and maintenance costs. Hence, before borrowing for a house you must ask yourselves if it is affordable. You must ask if your future employment is stable. If you’re planning on having children, will one partner give up work, or will there be childcare costs that affect the capacity to service a loan. Most young people assume their capacity to service debt will increase with age, but that isn’t always the case. Having children is one classic example of a huge increase in expenditure that has to be budgeted for. In summary, to prevent yourselves being overstretched financially in property, always ask yourselves the following 10 questions before signing up for a home loan:
5. Are you factoring bonuses and commission into the equation? 6. Will you have children? 7. If you have a joint income, is your partner likely to take time off to look after children? 8. Will you send your children to private school/ university? 9. How important is your current lifestyle to you? 10. Could you change your lifestyle in order to repay a big mortgage loan? The desire to own property is strong everywhere, and this trend is likely to continue. The rise in property prices over the years has made many people jump into the property market in search of gains. But property investment is by no means risk free. In fact, due to the leveraged nature of having to take on housing loans to buy property, investing in property can result in huge capital loss if the property market goes south. There are still some properties bought at the height of the previous property highs in 1990s which are now only barely breaking even or still underwater. The one and only one deadly ecstasy that catches a huge population of financially overstretched people is greed. While the potential for capital gain is there, we have to resist the temptation to buy as big a house as we can and always do our sums and checks first. As with all other types of investment, be prudence and do not overstretch yourselves in property, even if you can already see a big carrot in front of you.
1. Is your industry stable? 2. Is your job stable/how easy is it to find similarly paid employment? 3. What percentage of your income will be spent on the loan? 4. Have you factored in the cost of loan, insurance and maintenance?
About the Contributor
This article is contributed by KCLau and Dr. Ong Kian Leong, both the co-founders of the first ever online property investment course for Malaysians, called Property Method (www. PropertyMethod.com). KCLau is a serious financial educator. He had published 6 books and co-created more than a dozen online financial courses and Dr. Ong Kian Leong is the creator of the GoFinanceTM.
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PERSONALITY OF THE MONTH
AND INVESTMENT If there’s a superstar in property market, it would be Dr Dolf de Roos. Known as a man who demonstrates a deep passion for real estate, he speaks to Zuhaila Sedek-De Booij recently about his property venture.
f you’re one of the industry’s followers, you know that Dr Dolf de Roos is a staple name. He is best known for his New York Times’ Bestseller book titled Real Estate Riches and 52 homes in 52 weeks. Born to a New Zealander mother and a Dutch father, this 54 year-old property guru exudes such positivity that is to some extent very infectious. He shares with Property Insight his story as the industry’s believer.
de Roos started his property investment journey when he was in his first year of university, at a tender age of only 17. For most boys, being 17 means a time to chase after girls or to have fun at colleges, but for de Roos, he already thought about property investment. “I remember my first property was an old wooden villa. It was renovated into a few units and I rented out each unit. I will never forget the first four cheques I received from the rental units in the first
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week. I looked at all the money and added it all up and it was more than what the mortgage costs, the monthly insurance, maintenance and others. On top of that, I even had some leftover money. I thought to myself, ‘I’ve got to do this again’,” he says. He recounts the hassle of trying to get the mortgage for his property approved. “When I was 17 years old, I looked like I was 12,” he quips. “So, in that context, imagine myself going to a bank applying for a home loan. The banker thought I was doing a university prank and I was so devastated because I was serious about investing. I was scared then but I had to do it because I didn’t have the money to put down for the deposits. It took me a few attempts to finally get my application approved,” de Roos tells. “Throughout the process, I realised that I was no good at this (convincing the bank) so I went from one bank to another and another, while at the same time improving my pitch. Finally one bank said,
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PERSONALITY OF THE MONTH
‘Okay we’ll give you a try’. I think I went to five or six banks overall before I got my $4,000 deposits for my first property. At each bank, I asked for maximum loan and I never told any of them that I’ve tried applying at other places. It was scary because I was asking for a lot of money. Despite the difficulties, I learned to never give up,” de Roos shares.
The father of one child says that he doesn’t come from a family who’s into real estate. “I grew up in New Zealand and my parents lived in a motel. Every month they had to pay the landlord and they had to work seven days a week. I felt that it was not such a smart way to make a lot of money,” de Roos tells about his humble beginning. Driven by the will to succeed, de Ross became more motivated by the success of his first venture. He then continued to invest in the property market. While getting himself accustomed to the industry, young de Roos didn’t let himself get blinded by the money he earned from his investment. He continued to complete his Bachelor studies at the University of Canterbury and eventually earned a PHD in Engineering there. de Roos admits that he does love Engineering but thinks that the industry may not be as lucrative as real estate. Plus, de Roos had fallen head over heels for real estate and it was a bit too late to talk him out of it. “At the end of my doctorate studies I realised that I’ve spent eight years studying. Then I went to two job interviews and one of them offered me a job at $32,000 a year. Back then, it was a lot of money, but a week before the interview I had just completed a
real estate deal that earned me $35,000. “Then I thought, why would you work for the entire year just to get a lousy $32,000 when you can make $35,000 in a week? With just a transaction, I could take the rest of the year off,” de Roos tells. As the year progresses, de Roos’ passion for real estate started to bloom even more. For him, such a passion is very contagious and it gives him a ‘rush’ when investing in the market. “I find real estate multifaceted and it is what most rich people have in common. Over the years, I realised that in property investment, you learn more from failures than you do in success. When times are good, anyone can be successful but it is during the tough times your problem-solving ability is being measured,” he says.
From one property in New Zealand, de Roos’ portfolio expands around the globe namely in the United States, New Zealand, Europe and South Africa, among many other places. Going global isn’t something new to de Roos. Since young, he had lived in many different countries to follow his parents. “My parents even lived in Indonesia for some years!,” de Roos says. As an investor, he encourages Malaysians to invest around the world. “Firstly, Malaysians who are looking to invest overseas are actually serving and helping their country. Secondly there’s no one good place to invest, it depends on the circumstances. For example, if you can speak Spanish, I’d say get on the plane and go to Spain and invest. Don’t put your egg in one basket, spread them around. Go global, if you own two properties in Australia, then your next step is to go for London, Canada or the United States,” de Roos advises.
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PERSONALITY OF THE MONTH “I invest all around the world, some under my name, and some with groups. Rules in every country are constantly changing but what’s important is to find the ‘gems’,” he adds. He believes that the real estate market functions with natural forces. “Sometimes it rises, and sometimes it falls,” he says. Asked on some investment tips, de Roos recommends for investors to buy near a body of water such as by the lake, river or the sea. “Prices will always go up faster in these locations. Another prospect to think of is to cater to the elderly by investing in retirement villages paired with assisted living facilities,” he says adding that he uses special software to analyse properties in different markets. Now as a property guru, he finds himself leaning more towards commercial properties. Having written over 15 books, de Roos had recently introduced a book dedicated for investment in commercial properties titled Commercial Real Estate Investing. He says currently most of his investments are in commercial properties. “For commercial properties, the success depends on it’s geographic location. For example, in Wall Street, there’ll always be tenant because everybody wants to rent their office at Wall Street,” de Roos says. He advises investors to never manage their own properties, especially if they own a lot of them. Using a management company is a much better bet than self-managing the properties as it saves you the unnecessary hassles. de Roos cites that he is no speculator. “I’m a true investor. I don’t buy in bulk and I always buy one property at a time. Real estate is a long term investment. When I buy I always keep the property for long. What I’ll do is to keep adding value to the property so it’ll appreciate more. Why would you settle for less by disposing the property fast when you know you can get so much more by keeping it?,” he says confidently.
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A smart investor to him will always think of innovative ways to add value to his property, hence increasing its worth by folds. “I own a building in downtown Jakarta and I can tell you that it cost me about $20 dollars only to increase the investment return. With just paint and a brush, I painted a circle on the rooftop of the building turning it into a helipad. This helipad allows one to go to the airport faster especially when Jakarta is famous for its horrendous traffic jams,” he says. “All it requires to add value to your property is some creativity. And sometimes it can be as easy as installing energy-efficient light bulbs,” adds de Roos.
Malaysia from His Point of View
The avid investor who can speak Dutch, English, French, German and Flemish Belgium thinks highly of Malaysia. “Malaysia’s economy is booming and the economy of the middle class people is expanding rapidly. I have seen many changes and I am astounded by the rate of growth, from old buildings to new buildings. “Malaysia is also booming philosophically and intellectually and it is a great time to invest in Malaysia. I’ve seen many Malaysians investing overseas. Malaysia is also very progressive in the sense that the government allows foreign investment to flow into the country and at the same time encourages Malaysians to invest overseas,” he
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PERSONALITY OF THE MONTH
thinks. “Malaysia’s open policy on investments and banking is commendable. It’s always a Yin & Yang situation and you have to understand the trade in terms of how much risks you want to take for a reward. And I think Malaysia has good balance (of both risk and reward),” de Roos who is the president of Wealth Migrate - a global, self-service, crowd sourced property solution shares. Does he think government’s ‘intervention’ in the industry is good? He responds by saying, “Every government’s rules tend to have the inverse effect of the intended. Malaysia has a very good balance; the government is trying to control the people so nothing silly happens. I think Malaysia is in a sustainable state,” he says. He believes that Malaysia is producing many world class cities, for example Kuala Lumpur.
“The KL City Centre is fast becoming a world city centre and there is a high standard of shopping and transportation making it a good investment location. I had once invested in KL where I and my partners bought a building at RM1.8 million. It was vacant because there was a problem with the air conditioning and we fixed it at almost nothing. We managed to rent it out within two months. Malaysia to me is quite an exciting market,” de Roos opines. Talking to de Roos, it is easy for one to be in awe of his knowledge and eloquence. This highly sought-after speaker has a very down-to-earth demeanour and has helped people from over 25 countries to find success in property investment as well as in life. Today, apart from investing, he is also a key contributor to Donald Trump’s Trump University. He was also an advisor to Robert Kiyosaki’s Rich Dad Poor Dad book. “I’m very passionate about real estate and I find that passion is very contagious. Now I know that if you catch fire with enthusiasm, people would come from miles away to watch you burn,” de Roos says. He sure is right on that. Pull out info box: This November 1 and 2, Dr Dolf de Roos will head down to PRISM, a Property Investment Summit & Expo 2014 organised by Property Insight Malaysia where he will be sharing his knowledge and property investment tips. Don’t miss out on this opportunity and get your tickets NOW! For more details, visit www.propertyinsight.com.my
Dr Dolf de Roos is coming to malaysia to talk at our Property Investment Summit & Expo 2014. Don’t miss the opportunity to meet him in person get your tickets NOW! For more details, visit: www.propertyinsight.com.my REGIST E NOW! R Dates:
1st & 2nd November 2014 (Saturday & Sunday) 9AM - 7PM
Malaysia International Exhibition & Convention Centre (MIECC@THe MINES)
OFFICIAL MEDIA PARTNER:
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TOP PICKS PROPERTY: Cascades Corporate Office @ Kota Damansara BUILT UP: 710sq ft / 1100sq ft RENTAL PRICE: RM 1,500.00 / RM 2,400.00 FACILITIES: Next to Giant Hypermarket, Dataran Sunway, Giza Mall, The Strand AMENITIES: Strong security with access card system, cascading water features create a refreshing and calming ambience, ample parking with approximately 1600 bays, Wi-Fi ready at common areas CONTACT: Stacy 014-9340571 PROPERTY: Prestij @ Kota Damansara BUILT UP: 5000sq ft (25’x 67.5’) SELLING PRICE: RM 4.5 Million BANK VALUE: RM 4.3 Million RENTAL PRICE: RM 2000, RM 3000, RM 8000 *floor by floor AMENITIES: Future MRT station nearby, private lift and own car park CONTACT: Stacy 014-9340571 PROPERTY: Laman Bayu @ Kota Damansara TENURE: Leasehold LAND AREA: 22’X75’ BUILT UP: 3500sq ft SELLING PRICE: RM 1.7 Million (Intermediate) QUALITIES: Barbeque area, cafeteria, covered parking, jogging track, playground, 24-hour security AMENITIES: SMK Seksyen 10, SMK Seksyen 9, Masjid Kota Damansara CONTACT: Celine 016-2030965 PROPERTY: Bayu Puteri @ Bandar Puteri Puchong TENURE: Freehold BUILT UP: 900sq ft *corner unit FACILITIES: Swimming pool, barbeque area, gymnasium, salon, tennis court, sauna, badminton court, covered parking, mini market and 24 hours security AMENITIES: Easy access to Cyberjaya, Putrajaya as well as KL City centre through a network of major highway CONTACT: Celine 016-2030965 PROPERTY: New Double Storey Shop lot Seksyen 4@ Kota Damansara TENURE: LEASEHOLD BUILT-UP: 1440sq ft / 2160sq ft SELLING PRICE: RM 1.6 million RENTAL PRICE: RM 4500.00, RM 6500.00 *floor by floor QUALITIES: MRT Station (under construction), NKVE toll, Kota Damansara housing area CONTACT: Stacy 014-9340571
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WHEN THERE’ A WILL, THERE’S A WAY
n our previous issue, we have given a great deal of attention to the importance of having an exit plan in place when one ventures into property investment. It is a general exit plan our government has in place for everyone among us who lacks a well-defined and customised exit plan. Some of you may think that you have got no objection to the Distribution Act 1958 and therefore feel that this is well suited for you. Even so, you are advised to give this idea a second thought as it will not only mean distributing your estate with a fix way, but there are a few challenges before we get to the distribution stage. Essentially, when death
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happens, our assets will be frozen, so let us look at the challenges when someone dies without having a Will (intestacy).
Choosing an Administrator
To ‘unfreeze’ the frozen asset, a document named Letter of Administration (LA) is required. The person who is granted with the LA is essentially the legally permuted person to administer the estate and to facilitate the distribution. Under Probate and Administration Act 1959, any person ‘interested in the estate of the deceased person or in the proceeds of sales thereof’ is a qualified person to
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5% on value of estate, and will have wide power on the management of the estate, or due to trust issue among beneficiaries or party with interest. Do you want to retain the right to decide who should administer and distribute your estate? A valid Will can put this concern to rest, easily.
Locating all Assets of the Estate
Who would have the best understanding and knowledge about what we own, what we have, and what we have been secretly keeping? The answer is obvious, ourselves. That is why when a person passed away, no one knows how many insurance policies he had, how many bank accounts he had opened, how many stocks he had traded, did he own any business or any properties, where did he keep the car’s registration card, did he have any asset overseas and many other questions. The list of assets and the gross values of the estate are needed when applying for LA, hence it is imperative that these are known instead of being kept in the dark.
Finding Two Sureties
apply for LA. The act also provides provision so that even a creditor can be granted LA (of course, creditors have an interest don’t they?). In the event that there are disputes between people applying to be the administrator, the case will be heard before the Registrar of the High Court. Why would people be interested to be administrator? Administrator are allowed to have a commission not exceeding
One of the required conditions for administrator when applying for LA is to find two persons to act as sureties (or guarantors) to provide an administration bond equivalent to the gross value of deceased’ estate. Essentially, by “Gross value” it means the value of the estate within jurisdiction before deducting debts due by the deceased. The administration bond will not be needed when gross value of the estate is less than RM 50,000 or when the administrator is entitled to the whole of the estate after payment of debts or when the administrator is a trust cope ration registered under Trust Companies Act 1949. Surely, no one in his right mind would agree to be a surety for the administration bond unless he has an interest in the estate or is a closely related relative or a friend to the deceased. The administration bond is needed so that the interest of the beneficiaries are protected in the event that the administrator abuses the power or made a mistake pertaining to the management of the estate and causes some losses on it. Nowadays, most of us would easily have a gross value of estate that exceeds RM 50,000 but most of us would conveniently find reason to not be a surety for any person’s administration bond. Therefore, if something happens to us and we need someone to become surety for our estate administration bond, who should we count on? In view of the challenges discussed above, it is critically important that even if you think that the
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STRATEGY Distribution Act 1958 has a way of distribution that fits your intention and wishes, you should still at least write a Will. The reason is simple and easy, with a Will, we have more freedom, more power and a will may eliminate these challenges without difficulty. Letâ€™s take a look at the advantage that a valid Will give to the testator.
Power to Choose Executor and Trustee While someone who dies intestate does not have the power to choose who should become the administrator, the person who writes a Will (The Testator) have the power to appoint who should execute the instructions stated inside the Will. Indeed, when we are able to appoint executor (up to four executors), we are given the liberty to carefully select the person we trust and have faith in to execute our last wishes without having to worry the moral hazard or any abuse of power. We can also appoint a separate person to become the trustee to govern the action of the executor. This essentially forms a built-in control as the trustee will oversee the process of distribution of estate to ensure the interest and benefits of beneficiaries are not compromised. With an executor appointed, creditors will not be able to become the administrator of the estate and this will further ensure the interest of beneficiaries are protected. Faster and Swifter Process to Distribute Assets Generally, when we write a Will we will expressly state out our intentions and instructions for the executor on how to distribute our assets and to whom shall a particular asset be distributed to etc. Therefore, the executor will likely have a clear
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understanding of the assets that we do own, as opposed to someone who passes away intestate and unprepared where the family members are tasked with the challenge to find and locate the assets owned by the deceased. This saves a lot of time â€“ all courtesy of leaving behind a Will and this will also make sure that our families and beneficiaries will not missed out on some assets that we have spent our efforts and time to amass and avoid from it being left unclaimed and forgotten.
No Administration Bond is Required
As simple as it sounds, when administration bonds are not required, the executor does not have to look for two sureties, and this will make the process easier and faster for the executor.
Power to Appoint Guardian
This factor is really important for those who have children who are still minors under the law. Essentially, when someone passes away the right
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assets, but they will receive their entitlement via the trust as specified by conditions set out by the testator. This is useful when the surviving spouse is incompetent to manage the quantum of the estate and the testator has concerns that the estate inherited may be exhausted or fallen into the hands of scammers or any interested parties. Sometimes, the testator sets up a Testamentary Trust because they are not sure if the surviving spouse will really help to take care of the elderly parents, hence they create a Testamentary Trust to provide their elderly parents the living expenses they need. When the parents pass away in future, the trust will be dissolved and another named beneficiary will then inherit the balance of the trust assets.
Distribution of Assets According to Personal Wishes of guardianship is handed to the surviving spouse. In certain cases, the testator may want to appoint a specific person other than the surviving spouse to become the guardian of the children to ensure their interest and welfare will be taken care of well. I have heard from several people that their relativeâ€™s children are not being well-taken care of because the surviving spouse has re-married and become parents to a new family. In some instances, the surviving spouse may even lose the inheritance that belongs to the children due to gambling and excessive lifestyles, among other reasons. Also, think about this, what happens if both parents pass away due to an accident, who do you pick as the guardian of your children? Do you want to leave this to the Court, or let your children decide? A Will may ease this process.
Of course, the most appealing benefit a valid Will gives to the testator is the control and assurance that all assets will be distributed to the beneficiaries accordingly. Given that the assets may carry a personal value and are highly confidential, the distribution of the personal wealth must be done in accordance to the personal wishes. To make the process easier, engage a professional financial planner to help you construct your estate plan, as you will also be guided on how to create a comprehensive and holistic estate plan that caters to, and addresses your concerns.
Power to Create Testamentary Trust
The testator can elect to create a testamentary trust to ensure that all the money and assets will be managed according to wishes, if the intention to distribute it to the beneficiaries is not there. Testamentary Trust will ensure the testator control and avoid the beneficiaries from inheriting the About the Contributor
Kevin K.M. Neoh is a Licensed Financial Planner who is licensed by the Securities Commissions Malaysia and Bank Negara Malaysia. He holds a strong belief that families of all income levels should have access to professional financial planning assistance and that the financial world is too complex to shoulder alone. He actively seeks to assist people on the street to live a financially confident life. Kevin is one of the financial planners from VKA Wealth Planners Sdn. Bhd, Malaysiaâ€™s fastest growing home-grown financial planning firm. Kevin can be contacted at email@example.com.
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n todayâ€™s market, getting quality tenants can be tough but an investor could increase his chances by understanding what the tenants require in a property. Chief Executive Officer of REI Group of Companies Dr Daniele Gambero shares with Property Insight readers what tenants want from their landlords.
Added storage space
The location of a property has always been and will always be the key deciding factor as to whether a specified property can fetch higher rentals. Always understand that the property must be within close proximity to a myriad of amenities as well as public transport. Property agents need to understand the requirements of a tenant before showing a property. Tenants can vary from being single, married, with kids, hold jobs of different locale and come from different age groups as well. Most tenants are willing to pay higher rentals in the city if the property offers integrated living.
Buyers should always purchase properties that are readily structured to match the property ownerâ€™s best interest. It is always good to look out for a property with large common areas, high floor to ceiling height as well as many large windows to allow as much light and fresh air into the stuffiest of spaces. Large windows help with amplifying the space in even the smallest of spaces especially when these windows are installed in floor to ceiling heights. It is always best to let in as much natural lighting as possible as natural lighting makes a property appear cozier as well as creating an inviting feel for visiting future tenants.
Every tenant understands that the concept of renting a home simply means that someone has previously lived in the space prior and most tenants donâ€™t want to walk into a home that feels lived in. What a tenant needs is a refreshed environment which includes minor re-painting, newly fitted curtains, as well as well-maintained air-conditioners and you are good to go. Tenants love anything that looks feels and even smells new. Usually renovated kitchens as well as bathrooms are common favorites amongst tenants, while replacing some loose furniture may help as well.
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Many older homes lack sufficient storage space and a good place to start with enhancing a home would be via adding on storage space. Take note that all individuals have belongings and need space for storage. If you are not floor space rich fret not, make use of the walls and add on built-in cabinets as well as other storage options that your tenant will truly love you for.
Large Windows/Natural Light
In more humid countries, not having installed an air-conditioner in a unit soon to be tenanted can be a deal breaker for tenants. Air-conditioning and properly ventilated units are truly a necessity with many tenants placing much importance in this feature in any given property to be tenanted. Air conditioning in any given property should be installed in a room to room basis and not in a centralized manner as this would result in exorbitant electrical bills that a future tenant may have to face.
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BEWARE TENANT; WATCH OUT LANDLORD!
ou have purchased a house or office lot that you do not need to use immediately. You decide to do the sensible thing â€“ to rent it out. You hope that things do not go wrong; that your tenant pays you the agreed rent, that your tenant pays you on time and that your tenant does not do anything illegal or immoral with your property. But things may go wrong as well â€“ something that you may not even think of. For now, your tenant does not pay the agreed rent. You have your remedies under the tenancy agreement. For practical purposes, you engage a lawyer to sue your tenant. This may be quite costly. It is quite normal to take at least a few months before your case is heard. By that time, your tenant may have shifted out and disappeared. Your lawyer may take out a writ of distress. This is faster but it may be a bit more costly. In the course of my practice,
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I have advised some of my clients the following course of action (Note: the reader is not advised to pursue this course of action unless the lawyer gives you the nod). Hitherto, you sue him. Now you are prepared to be sued, if at all. I advised my
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client to first secure one or two friends of his/her who are prepared to be his/her witnesses in court in the event of an impending legal suit. Then make a police report – stating that you are going to break into your own premises by reason of the tenant’s failure to vacate the property. (Again, please seek the advice of your lawyer before doing this) Statutory declarations from the friends are sworn by reason of the same. Then break into the premises. Take dated pictures of the premises. Pack all his/her things into boxes. Make a detailed inventory of every single item you have packed into the boxes. You and the ‘would be’ witnesses sign on the inventory that these are all the items in the premises and there is NO other item in the premises. Your tenant may file a suit against you to say falsely that his wife’s diamonds are lost or some cash in the drawer is stolen. You must be ready to be taken to court. Of
course your lawyer would have written warning letters to him/her earlier. In this scenario, you get your premises back immediately. In another situation, your tenant commits a crime in your premises. If a murder is committed (or robbers die in your premises in a police shoot out), the value of your property would drop significantly. Then your tenant may use your premises as a drug processing center and when the long arm of the law catches up with him, the police would normally require your presence in the police station for a statement to be recorded. There is much hassle that you would not like. As such, it is advisable to conduct/create a “screening” procedure to avoid the above event. This can be done by creating a screening process, rejecting tenants based on legitimate reasons, such as insufficient income, bad credit history, requesting for their history of bank statements, or a negative reference from a previous landlord/friend and to interview the purported tenants prior to the execution
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LEGAL of the tenancy agreement. What other things that may go wrong? I have a landlord client who told me that his rent has not been paid for a few months. He has been harassing his tenant for payment. One afternoon, he found his premises all quiet. The family has moved out. There were no pets around. The premises were locked. The tap was running. The fan and some lights were switched on. My client peeped through the window and found that no one was in the premises. What would you do? Well, consult a lawyer. What would be his advice? He would most probably advise that a police report is lodged prior to the entry of the unit. In any event, the above can be avoided if sufficient sums of monies are retained for relevant deposits. Now, the roles are reversed. You are a tenant. Beware the landlord. You want to rent a house presently occupied. You speak to the occupant and you may even draw up an agreement with him or her. You pay your rentals to him or her promptly but after two years, someone comes along to talk to you. That someone says he is the actual owner of the house and your rentals have not been paid to him. The earlier occupant of the house may just be a relative. As far as the owner of the house is concerned, you have not paid rent for two years. There may be another situation when you have paid your rent regularly and on time to your ‘landlord’. After one year, you discover that the premises you are renting actually belongs to three owners and the recipient of the rent you pay has used up the money. The other two owners come after you. To avoid all of the above, ensure that all relevant searches and verification on the property are conducted prior to the execution of the tenancy agreement. In the event the individual title of the property is issued, a search with the land office can be conducted to verify the owners of the property. In the event the individual title of the property has not been issued, i.e. master title, then the relevant verifications can be made at the developer’s management office. Quit rent and assessment receipts can also be supporting proof of the verification of ownership of a property. For purposes of completeness, a guide to the
calculation of legal fees and stamp duty payable in preparation of rental agreements is provided as follows:-
Legal fee for rental agreement period of below 3 years •
For first RM10,000.00 rental – 25% of the monthly rent For the next RM90,000.00 rental – 20% of the monthly rent Where rent is in excess of RM100,000.00 – negotiable
Legal fee for rental agreement period of above 3 years • • •
For first RM10,000.00 rental – 50% of the monthly rent For the next RM90,000.00 rental – 20% of the monthly rent Where rent is in excess of RM100,000.00 – negotiable
Stamp duty payable to Land Office for tenancy Rental for every RM250 in excess of RM2,400.00 rental • • • •
Less than 1 year: RM1 Between 1-3 years: RM2 More than 3 years: RM3 Note: rental below RM2,400.00 – no stamp duty
Calculation of legal fee and stamp duty for renting a property of RM2,800.00 per month for 1 year Legal fee: RM2,800.00 x 25% = RM700 Stamp duty: (RM33,600.00 (annual rent) – RM2,400.00/RM250) x RM1.00 (1 year) = RM124.80.
This is not an academic paper but an opinion of the writer. Please consult a lawyer before any course of action is taken.
About the Contributor
Jason Tay is a partner of Tay Ibrahim & Partners. His current practice pivots in real estate transactions involving sale and purchase, financing, tenancy and lease transactions. The writer can be reached at firstname.lastname@example.org
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Ever wondered how your Defect Liability Period works? Rachel Joseph tells you more.
nvesting in a property doesn’t just include buying a property. What comes next after the purchase is much more complicated. One of the factors to look into is to ensure the property is in tip-top condition, as promised by the developer. There’s nothing more frustrating than buying a property that is defect-ridden. Such a case can be very anticlimactic, especially for buyers who are excited with the purchase. So, what do you do when your newly purchased home has a defect? This is where Defect Liability Period (DLP) comes into the picture. DLP is stated in the Malaysian Housing and Development Act and can be applied when homeowners are in the dark about their rights to a no-defect property.
What is Defect Liability Period?
Simply put, DLP is also known as a ‘rectification period’. It is a comprehensive law governing the housing industry approved by the Parliament with three main objectives; firstly, to check the abuses of the then infant housing industry; secondly, to regulate the activities of housing developers and thirdly, to protect house buyers for a limited period of time. In a nutshell, it can be understood that DLP is an act of warranty aimed at the rights of home buyers to
get their property defects fixed by the developer. According to Architect Centre Sdn Bhd’s accredited architect, building inspector and trainer, Ar. Anthony Lee Tee, “DLP is an agreed duration between the time a new property is handed over to a purchase (date of vacant possession) which is usually 24 months where the property developer is liable to undertake remediation, repairs and replacement of defective workmanship, construction, materials and finishes used. “Hence, every house purchaser that has bought a property from a registered housing developer regardless of landed or strata, that have used the standard sales and purchase agreement (SPA), will enjoy 24 months of DLP. At times, some developers do provide a longer duration.” DLP can be applied by house buyers who buy properties that are under construction and it has no relevance to those buying completed homes, as it has exceeded the DLP period. Within the warranty period, as a property buyer, this is the time to point out any defects on your newly purchased property However, bear in mind those defects should be in accordance with the signed buying contract. In case you found any defect, you have to issue the instructions to the contractor/developer to fix the defects within a reasonable time.
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CB Richard Ellis Sdn Bhd’s executive vice president Wan Faizah Che Din
Property management company CB Richard Ellis Sdn Bhd’s executive vice president Wan Faizah Che Din says, “All expenses to repair the defects shall be borne by the contractor and no additional costs should be charged to the client or employer. A certain percentage of the contract sum is also retained as retention sum during the DLP period and to be released to the contractor upon completion of the DLP. In the event that the contractor failed to remedy the defects within the stipulated period, the employer has the rights to remedy the defect themselves and deduct the same amount from the retention sum.”
“In Malaysia, DLP was first introduced when developers started to abandon housing projects and Ar. Anthony Lee Tee
walked away with purchasers’ money. There were inadequate controls where anybody who’s anybody can become a developer. This is why DLP was implemented,” says Anthony. In the beginning, the DLP covered a period of 12 months only. But then, it was extended to 18 and now to 24 months due to the rising cases of shoddy workmanship and complaints to the authorities. Anthony believes that most Malaysians are cognizant of DLP and have used this provision in the Sell and Purchase Agreement (SPA) to overcome cosmetic decencies in their property. “Most purchasers are not usually in a position to identify structural defects, cracks and leaks which if it is not stipulated within the DLP, the purchasers’ may have to bear the costs for the costly repairs. Also, purchasers may not able to distinguish whether the repairs have been carried out adequately or otherwise,” he says.
Before and After
DLP’s introduction has brought about a good improvement in the property market. “Relevant ministers are also being stringent when it comes to enforcement of laws governing DLP and this has changed our property sector to be a more responsible and sustainable market place,” says Wan. She also says that prior to the introduction of DLP, there were only a few responsible developers who remedied the defect promptly post vacant possession. “However, now the market has matured as consumers are more aware of their rights and the platforms for them to complaint are easily accessible,” she highlights.
How to Fully Utilise DLP?
If you are the purchaser and found a defect on the property you just bought, first thing you ought to do is to report it to your house management service. It is important to report the defects before the DLP ends. Upon the report, the contract administrator will decide whether they are actual property defects and are in accordance with the contract or not. “DLP is like a product guarantee. If something breaks down or not functioning as intended and if it is not due to wear and tear, purchasers can seek remedy without going to great lengths, unless of course when a rogue developer fails to respond timely and adequately,” Anthony comments. He then continues, “Every new construction is hand built from scratch using thousands of small components and materials will invariably encounter shrinkages, cracks and defects. DLP takes these
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PROPERTY MANAGEMENT into consideration and outlines the steps as well as obligations of the developer to rectify the problem.” It is also vital to get a quotation from your contractor on the defects reimbursement (each developer will have their own price list).
What if there is No Contractual Provision for Defects Ratification?
If your property is not bound to DLP’s contractual provision for defects ratification, then you are on the unfavourable side. Wan explains, “If there is no such provision, there will be subsequent argument and prolonged arbitration between the contractor and the developer and eventually this will create a complication between the developer and property buyers.” On another note, Anthony says that for the nonhousing properties such as shops, commercial properties and factories, they are not governed by the DLP. “In such developments, DLP is based on the willing buyer or seller’s provision in the SPA. Most developers will provide a minimum of 12 months DLP. Thus, it is very important for you, as a buyer to read your SPA before signing it,” shares Anthony.
You’re lucky if your property developer provides a warranty period more than what they’re obliged to. Wan tells, “Extra warranty period will be a good move as it provides credibility to the construction industry and at the same time promotes a healthy competition among the market players, and it is an embodiment on quality control. Plus, this extension gives the buyers more assurance to quality homes.”
Q&A 1) are developers responsible to fix the defects after the dlp has expired? Anthony: A recurring defect, when it is originally reported in writing, may be considered as defects although the DLP has expired. Unreported latent defects (cracks) that were undetected; for example structural deficiencies which appears years later may be considered as defects, too. Recently, several house owners in Kota Kinabalu won a case against a developer for latent defects that occurred many years after their DLP expired, and the developer’s appeal was rejected too. 2) How can a developer avoid facing the repercussions of DLP? Wan: In our opinion, there is no fool proof method but the developer could reduce the risk by using the right materials for their development, good workmanship and proper method of construction with prime focus given on the quality, throughout the stages of constructions. 3) How dLP affects property management COMPANY? Wan: The property management company needs to establish the defects in the given period in order for the developer to rectify all the defects in time. Therefore, it would be important for the property manager to focus on preventive maintenance as well as the administrative part of the developed property. 4) What is the guarantee or warranty period for supplies? Anthony: Guarantee and warrantee are usually provided for external wall painting, waterproofing and pumps that may extend from five to ten years. There are times where developers may not extend these warranties to the owners unless specifically requested. The DLP provisions can also be found under the following clauses of construction contracts: - PAM 98 Clause 15 – Practical Completion & Defects Liability - IEM/JKR sub-clause – 45(b) Defect Liability & Making Good - CIDB Clause 27 – Defect Liability after Completion
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BANGKOK OH BANGKOK... Aidil Mohamad finds out if Bangkok still holds the torch for property investment.
ince the Asian Investment boom in the 1980s and 1990s, Bangkok, the capital city of Thailand, has long been a centre for multinational corporations to set up their regional headquarters. Named as one of the vibrant cities in Asia, it is now a major regional force in finance and business and also an international hub for transport and health care. Complementing its many accolades, Bangkok is an emerging centre for arts, fashion, and entertainment. But with Bangkok’s current political turmoil, does the city’s prospect in property investment get affected? According to Knight Frank’s Director of Research and Consultancy, Risinee Sarikaputra the political situation as well as consequently economic slowdown may have discouraged consumer confidence, but leading property developers expect the market to recover in the second half of this year. “Most of them are in a state of “wait and see”. In addition, credit constraint of potential buyers will likely be another factor deterring potential demand
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of the condominium market. International buyers may be reluctant to visit Thailand owing to the political situation. However, some investors view this as an opportunity to expand their property portfolios as there are many great bargains up for grab, which may appreciate in value significantly after the current political situation improves,” explains Risinee. Properties in Bangkok are relatively undervalued and despite an unclear general concept of developments in Bangkok, the city is still a top-three destination for lifestyle in the eyes of investors.
The rapid growth of Bangkok, despite little urban planning and regulations, has resulted in haphazard cityscape and inadequate infrastructure systems. Even with extensive highways and substantial private car usage, the city was threatened by severe air pollution back in the 1990s. This as a result forces the city to turn to public transport as to counter the problem.
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Source: Knight Frank Thailand Research and Consultancy Department
Today, there are four operational rapid transit lines in Bangkok to cater for the citizens, with more systems under construction or planned by Bangkok’s government and Bangkok Metropolitan Administration. Over the years, the selling prices of properties in Bangkok continue to increase. The highest average unit selling price for condominiums is exhibited by the Central Business District (CBD) which is at Thai Bhat (THB) 175, 000 per sq m. “Due to the lack of new condo supply in the CBD, projects located around the city fringe, with easy access into the CBD area have been able to achieve selling prices at par with those within the CBD area. The sharp rise of land price in Bangkok is reflected in the pricing of new condominium projects and therefore will be more expensive than the past projects. This will help push prices up for the completed prime condominium projects”, Risinee says. She also mentions that the resale price of condominiums in the city area of Bangkok is constantly increasing, though the increment may vary accordingly, even within the same building. “It depends on the differences in the characteristics of each unit and the seller’s urgency. Smaller size properties with more efficient layouts can still generate price appreciation. Interior design, fit-out works are also important criteria in fluctuation of
pricing as well,” she adds.
Condominium projects located in the city area of Bangkok are able to gain good yield- approximately in the range of 5% to 7%. The yield depends on the quality of a house’s interior design and furnishing of the unit as well as the specifics of the unit (size, floor location etc). “Though for Bangkok’s citizen, smaller modern residential units such as studios and one-bedrooms, generally achieve higher rental yields compared to larger units, ranging from THB23, 000 to THB29, 000 per month in CBD area,” Risinee tells. The rental rate for two-bedroom units in Bangkok ranges from THB65, 000 to THB95, 000. This differs for premium condominium projects such as Oriental Residence that could reach the price of THB100, 000 per month, and the rental rate for threebedroom units could go above THB100, 000.
On Knight Frank’s website, it has been reported that Bangkok’s prime residential land index has been increasing over the last two years by 190.7%. The sharp increase of land price in the CBD is causing commercial developers, especially office developers to shift out of the CBD area; since the
International Market.indd 3
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INTERNATIONAL MARKET Selling Price, Monthly Rent and Approximate Yield of the One-Bedroom Condominium Unit size
Approxima te Yield %
The Address Chidlom
19,360,000 - 27,060,000
3.1 - 3.4%
Source: Knight Frank Thailand Research and Consultancy Department
Selling Price, Monthly Rent and Approximate Yield of the Two-Bedroom Condominium Unit size
Approxima te Yield %
The Park Chidlom
Royal Maneeya Suites
12,980,000 - 14,750,0000
6.1 - 6.9% 5.8 - 7.0%
5.9 - 7.0%
Source: Knight Frank Thailand Research and Consultancy Department
Approxima te Yield %
The Park Chidlom
Source: Knight Frank Thailand Research and Consultancy Department
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Knight Frank’s Director of Research and Consultancy, Risinee Sarikaputra
developing office buildings are unlikely to be feasible in the CBD area where land price is very high. “Based on the recent high land prices of over THB 1million per sq m (or four sq m), the feasibility of many condominium projects is in jeopardy, as selling prices of individual condominiums must be beyond THB200,000 per sq m (USD 6,500 per sq m),” Risinee shares. Thais will be the majority buyers of peripheral condominiums, purchasing units for own-stay homes, whereas buyers of condominiums in the CBD were mixed among Thais and foreigners, mainly from Hong Kong, Singapore and Japan. They buy for their own use while in Thailand and also for investment, as property offers a better yield, along with the possibility of capital appreciation. Condominium selling prices in the peripheral area range from THB37, 950 to THB83, 620 per sq m. The location in the peripheral area with the highest selling prices were in the late Sukhumvit stretch from Sukhumvit Soi 50 to 77 eastward. This area achieved prices in the range of THB69, 160 to THB83, 620 per sq m. The area in the northern part of Bangkok achieved selling prices in the range of THB53, 929 to THB64, 309 per sq m.
Risinee also mentions about how important accessibility in Bangkok. “Accessibility is important in Bangkok as it is vital to be able to reach different parts efficiently. Some projects may be located close Unit Type
Source: Knight Frank Thailand Research and Consultancy Department
to the entrance of tolls yet take more than 30 minutes to reach the entrance of the toll due to traffic. As a rule of thumb for walkability; the distance from a condominium to a given mass transit station should not be over 500 metres,” she explains. Risinee cites the hotspots for investment in Bangkok is the city area that surrounds the CBD. Such an area is popular with expatriates, tourists and upper class locals. Another popular area in the City Area is along the Chao Phraya River which is by Charoen Nakorn and Rama III Road. The city area in Bangkok is divided into sub-areas as follows: • •
CBD: This is the area that encompasses Sathorn Road, Silom Road, and Wireless Road CBD corridors. It is an established business location with quick access to Sukhumvit, Rama 3 and the riverside areas. Sukhumvit: This is the section of Sukhumvit Road between Soi 1 and Soi 63 to the North and Soi 2 and Soi 42 to the South. This area is popular with expatriates and tourists and spans the Asoke Intersection on the West to the Emporium Mall to the East. Rama 3 and Riverside: This is the area that stretches along Charoen Na Korn Road of the Chao Phraya River southward just past the Sathorn Bridge and to the North of Sipraya Road as well as the area along both sides of Narathiwas Ratchanakarin Road.
Risinee thinks that the exchange rate depreciation of Thai Baht would further encourage international buyers in property purchasing. “The downside effect of the political situation in Thailand has not greatly impacted the property market. “The political situation has been beneficial in a sense that the condominium market has cooled down, reducing the likelihood of an oversupply. “The emergence of the Asean Economic Community (AEC) in the near future will also potentially drive the demand for business expansion and accommodation. We expect to see the Bangkok condominium market pick up in the upcoming period after the current political situation is resolved. The limited supply of land for developing condominium projects as well as the increase of development costs such as land, labour, and materials will continuously drive condominium prices up in the future,” Risinee concludes.
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LIGHT T SMART Passive design for interior lighting in energy efficient office buildings is the way to go writes Dr. Muhammad Arkam Che Munaaim.
lectricity wastage today is a national agenda and is a great concern. Energy Commission in 2011 had reported that the maximum demand of electricity in Peninsular Malaysia is continuing to increase. In 2009, the demand was 14,245 MW and it increased to 15,072 MW in 2010. The year after, the demand further increased to 15,476 MW with the limited generation capacity being harvested at 21,817 MW during this three-year period. On average, an increment of more than 2% is being recorded yearly from all sectors throughout Malaysia. In 2012, the annual electricity demand in the country increased by 4.3%. This shows an upward trend in electrical energy demands and therefore intensifies the importance of energyefficiency and natural energy harvesting. This must be explored in order for us to find good solutions in optimising the energy available around us. Of energy use, electric lighting constitutes to 13% to 43% of building electricity consumption in commercial and office buildings. An energy awareness survey conducted by Universiti Sains
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Malaysia in 2010 concludes that 80% of the building occupants need to switch on their air conditioning during working hours while 55% of the respondents answered that they need to switch on the office lighting even in daytime during working hours. It is possible to reduce energy consumption in any building by reducing the wastage through daytimeâ€™s interior illumination and this can be achieved through proper passive design. For tropical climatic country such as Malaysia, there is an abundance of natural lighting that should be used.
Optimising Daylight in Building Design
Passive daylighting strategies in building refers to the design and construction of a building. It takes optimal advantages of the environment for energy efficiency without imposing any significant extra cost, as compared to the more highly serviced building. The architectural consideration in designing a building is influenced by its responsiveness to the immediate environment. All buildings have a primary function to provide an internal environment that is suitable for the purpose
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of the building. The passive elements are not just to be absorbed in the design and construction stage, but must be able to be sustained in a passive way during building operation and maintenance cycle. Passive daylighting strategies usually depend on the architectural design of the building and work by applying the correct approach to designing a building. In Malaysia, MS 1525:2007: Code of Practice on Energy Efficiency and use of Renewable Energy for Non-residential Building is currently being applied to design an energy efficient building. According to the code, daylighting designing must emphasised on natural daylighting and should have
begun at the preliminary design stage. Generally, the accepted illuminance level value for interior office in Malaysiaâ€™s building is between 300-400 lux (value for illuminance) in a comfortable temperature of 24 C and a humidity level of between 55% to 70%. Building must be designed to achieve the above recommended values which are considered minimum, in order to run a building operation that carries minimal energy cost. Designers must be aware on the criteria to be embedded in their design as early as in preliminary stages. As mentioned earlier, the possible electrical saving is obtainable from the operation of artificial lighting during daytime and this writing focuses on the passive approach to have a good interior illuminance mainly by using the available daylighting outside the building. Researchers who studied the tips for daylighting using windows stated that the position of the window is one of the parameters that will affect daylighting. The higher the window position is, the deeper the light travels. The daylighting zone is typically limited to 1.5 times the windowâ€™s height. The table in the next page summarises the daylighting methods for internal lighting and building design. In understanding the passive and active strategies in implementing daylighting, daylighting design and itâ€™s configurations are essential to be understood especially in sustainable building
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PROPERTY ENHANCEMENT Methods of bringing external illuminance into the building. DAYLIGHTING METHOD
Skylight placed horizontally in flat or sloped roofs
which can provide a uniform level of illumination throughout a space. Skylights are generally effective for lighting horizontal tasks and function best for one-storey.
Roof monitors are in raised or elevated rood planes.
The higher plane contains a monitor which illuminates task areas under each monitor bay. Glazing may be vertical or sloped. However, monitors should be avoided on east and west orientations.
Sawtooths are apertures with vertical or angled
glazing installed in a slopped roof plane. They are mostly used in industrial building and manufacturing buildings as the primary light source. The slope of sawtooth is generally at a 45 degree angle.
Lightwells are openings in the ceiling or floor of a
room that allow daylight penetration to the floor, or floor below. Lightwells are generally utilitarian shafts for daylight and ventilation, for unoccupied space. Performance of lightwells depends on the depth and the aspect ratio of the shaft.
Atria are central areas of multi-storied buildings that are open to the sky. Atria are a popular design as they give a feeling of space and light. Atria can be glazed to create a controlled environment. Short and wide atria perform better than tall and narrow atria. Performance of atria, like lightwells, is dependent on aspect ratio.
Solar tube skylight consists of a small glass or plastic dome shape mounted on the roof that collect sun and direct it into a polished aluminum tube that extends from the roof to the ceiling. Solar tube skylight lets in lots of lights from a rather small opening. Much smaller than standard skylights. Thus reducing the amount of heat.
Fibre optic lighting system Sunlight is captured by receivers on the outside of the building. Optical fibres transfer the sun light through the building structure and into the indoor environment. Inside, natural sunlight flows out of the remote daylight design
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PROPERTY ENHANCEMENT design. Engineers and building owners need to insist on the sustainable design for interior lighting by exploiting the available daylighting for building operation.
The government is now enforcing an Electric Supply Act 1990 (Act 447, 1990) where a subchapter from the act called for any installation that uses or generates its own use electricity up to 3,000,000kW/h in six months to submit an Energy Audit Report endorsed by Competent Energy Manager who is appointed by the Energy Commission. In 2009, the government formed a new Ministry called the Ministry of Energy, Green Technology and Water to enforce and support the nationâ€™s developments towards sustainability and energy efficiency by introducing attractive incentives for both Renewable Energy and Energy Efficiency activities in Malaysia. The government has also introduced a green rating system called Green Building Index (GBI) certification in 2009. It works as a rating system in setting the standard and achievements for any
buildings as well as to countercheck the overall progress towards energy efficiency. GBI is an environmental rating system for buildings developed by PAM (Pertubuhan Arkitek Malaysia) and The Association of Consulting Engineers Malaysia. It is developed specifically for the Malaysian tropical weather, environmental and developmental context, cultural and social needs. Meanwhile in 2011, the Sustainable Energy Development Authority of Malaysia (SEDA) was established as a statutory body formed under the Sustainable Energy Development Authority Act 2011 (Act 726, 2011). Its role is to administer and manage the implementation of the feed-in tariff mechanism which is mandated under the Renewable Energy Act 2011. The five years Malaysian Budgets from 2010 to 2014 had consecutively emphasised on energyefficiency issues in terms of its benefits and the incentives to encourage sustainable development and energy efficiency among the public. Such an act is an indication of the governmentâ€™s seriousness in educating, encouraging and enforcing any rules and order towards energy efficiency and sustainable development nationwide. Energy saving may account as a small contribution if done individually. But imagine the effect if it was done by building owners. Therefore, energy awareness campaign must be done to educate all building owners in Malaysia. Saving the energy is beneficial not only for financial reasons but it is also our responsibility to protect Mother Nature, hence ensuring a better tomorrow for our children.
About the Contributor
Muhammad Arkam Bin Che Munaaim is Registered Professional Engineer Malaysia in 2005 and Corporate Member Institute of Engineers Malaysia in 2004. He is a Professional Member of Malaysia Green Building Confederation (MGBC) and also a Qualified Person (National Water Services Commission) for water supply and sewerage treatment system in design and endorses various range of sewerage treatment plant applicable in Malaysia. He can be contacted at email@example.com.
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